Ever since Netezza became a public company, every once and a while someone tries to start a rumor that Netezza is on the verge of being acquired (likely started by people who want a quick return on their Netezza stock buy). These rumors usually involve a company like Oracle buying Netezza, which never made a lot of sense to me, since Oracle has their own DBMS product and has very little reason to buy a much smaller competitor like Netezza and maintain two lines of code that target the same market. This is why it wasn’t surprising that Microsoft chose to acquire DATAllegro instead of Netezza, even though Netezza was much farther along than DATAllegro and had a larger customer base. DATAllegro essentially left the DBMS engine in tact, with its key technological assets sitting on top of the DBMS, turning many single-node Ingres instances into a large, shared-nothing, MPP DBMS. Since DATAllegro used a nice, modular architecture, Microsoft was able to replace Ingres with SQL Server, and use DATAllegro’s technology to turn SQL Server into a MPP DBMS without significant modifications to the core SQL Server DBMS engine (see Microsoft’s Project Madison).
But two events now make me wonder if Netezza might actually end up being acquired by a vendor that currently sells a competing DBMS product (likely either IBM with DB2 or HP with NeoView).
First, there was the release Oracle Database Machine. Oracle openly admits that the Oracle Database Machine frequently gets a factor of between 10 and 70 performance improvement relative to previous Oracle offerings (i.e. Oracle RAC) on scan-heavy analytical workloads. But the center of the Oracle Database Machine is …. Oracle RAC! So how does it get the order of magnitude performance improvement relative to RAC? By connecting RAC (using Infiniband) to a shared-nothing storage layer (Exadata) that can perform database scans at extremely high speeds and do some basic database operations like tuple selection and projection. Since scan-oriented queries are limited by the speed with which the scan can occur, simply connecting RAC to a storage layer that can do scans really well yields significant improvement.
Perhaps Netezza’s greatest asset is its ability to achieve high performance on table scans. By using FPGAs to perform decompression, selection, and projection as data is read off of disk, Netezza is able to perform scans faster than what competitors (at least row-store competitors) can do on commodity hardware. If the Oracle Database Machine is successful (Larry Ellison said at a recent earnings call that it "is shaping up to be our most exciting and successful new product introduction in Oracle’s 30 year history"), I would expect its competitors to follow suit --- and connect their DBMS engines to a high performance storage layer the way Oracle did with Exadata.
Second, Netezza’s recent move to re-architect their appliance via TwinFin (announced a few weeks ago) is a clear embrace of commodity hardware components. Before this redesign, Netezza was a monolithic appliance. As detailed by ComputerWeekly, if you wanted to upgrade storage or processing capacity, you had to wait for the next Netezza release and replace the whole appliance with the Netezza’s next generation. Now, the core part of the Netezza technology can be placed in the “sidecar” expansion slot in the standard IBM BladeServer family of servers. This allows customers to upgrade the IBM blades independently of the Netezza technology.
Looking at it a different way: the technology behind Netezza’s stellar scan performance can now be found in a nice modular component, the “DB Accelerator” card, that can be placed in standard expansion slots in blade servers. The move towards a more modular architecture is reminiscent of the DATAllegro architecture that allowed Microsoft to replace Linux with Windows and Ingres with SQL Server and keep the majority of the rest of the DATAllegro technology. DATAllegro was sold for $275 million to Microsoft when it only had 3-4 customers.
Netezza’s current market cap is currently $550 million and it has orders of magnitude more customers than DATAllegro did (and is currently profitable). Hence it seems like a prime candidate for an acquisition. Its recent architectural redesign allow it to be acquired even by a company with a competing data warehouse product, since its core technology can be used in the storage layer as a drop in accelerator for table scans and used in a similar way that Oracle uses Exadata. IBM seems like a natural fit given their close partnership on TwinFin. Otherwise HP seems like an option since NeoView seems like it is having trouble getting off of the ground. Time will tell, but I will no longer ignore Netezza acquisition rumors the way I once did.