Microsoft's DATAllegro Buyout Could Start a Trend

Microsoft is making a push into the data warehousing space with the purchase of DATAllegro, in a move that could touch off similar acquisitions by other vendors.

The acquisition, being made for an undisclosed sum, is aimed squarely at strengthening Microsoft's position in the data warehousing market, which is rapidly expanding because of the explosive growth of enterprise data volumes.

"We really do have limitations in terms of high-scale data warehousing, and our customers have been applying pressure to us to go address that," said Quentin Clark, general manager of SQL Server at Microsoft. "It allows [us] to extend our reach into the market into the highest places."

Founded in 2003, DATAllegro markets an MPP (massively parallel processing) data warehouse appliance based on the Ingres database. The company targets large-volume, high-performance data warehouses, making it part of a growing market of appliance providers serving enterprises that are steadily scaling up their data warehouses.

Several analysts said they think the deal, expected to close by late August, will be the first of multiple acquisitions in the space as enterprises seek help handling large volumes of data. To Gartner analyst Mark Beyer, the acquisition plans underscore the need for software-based DBMS vendors to find ways to deal with chokepoints created in the hardware environment, such as narrow I/O bandwidth.

"The way the data warehousing market seems to be playing out is that it is becoming more and more necessary for the software vendor of the DBMS to control the hardware environment if they want to succeed," Beyer said.

The candidates for acquisition could include vendors such as Dataupia or Greenplum. Incumbent enterprise data warehouse vendors may take a look at those two or other data warehouse appliance pure-plays rather than spend money making modifications to their existing solution stacks, Forrester Research analyst James Kobielus wrote in a blog post.

"Look for Oracle, SAP, and HP (Hewlett-Packard), in particular, to make strategic acquisitions of the sort that Microsoft has just announced," Kobielus opined.

Forrester analyst Noel Yuhanna also speculated that HP might be looking for acquisitions, contending that HP's Neoview DW product has not gained much momentum in the market compared products from Teradata, DATAllegro or Netezza.

"With DW appliances getting momentum, it's the hardware [and] storage guys that are likely to have an edge, especially if these appliances have to scale into hundreds of terabytes and petabytes," Yuhanna said.

DATAllegro CEO Stuart Frost said the company had been interested in getting acquired, and made architectural and business decisions with that in mind.

"What [Netezza has] is a completely proprietary hardware platform," Frost said. "We've taken that slightly different approach of being very nonproprietary, using a standard database engine underneath it all, and that's proved very attractive to Microsoft."