Tradi&onalDataWarehousesolu&onhelpscustomersinstoringvaluablebusinessdataandinextrac&ngstrategicinforma&onfromthedatacluBer
Order Sales Marketing Accounting
Company Operational Data Sources 1
Servers, Storage...
Data Warehouse Databases
Oracle, Microsoft, IBM, Netezza, Teradata
Business Intelligence/ Analytical Applications
COGNOS, Oracle, SAS, Microsoft,
Business Users
2
3 Customer value proposition
Stores and retrieves large amount of important daily and historical data
Helps users create complex queries to retrieve data in a user friendly way
Provides security for sensitive data
Assists decision makers to get meaningful information form large piles of data by performing complex analyses
Data is the most valuable business asset and analytical information helps business stay competitive in the market
Data Warehouse is a ~$9 Billion global industry, out of which US market contributes 50%
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
DataWarehouseRevenue
DataWarehouseRevenue
11% CAGR
50%
35%
15%
Global DW Market Shares 2010
America EMEA Asia/Pacific
Which is growing at an impressive double digit annual rate
A highly consolidated industry with ~90% market controlled by top 4 players
Source: IDC report
Highlyconcentratedindustrywherecompe&&onisbasedonpriceandproduct/serviceporPoliocoverage
Barriers to Entry
(Medium)
Suppliers Power (Low)
Substitutes (Low)
Buyers Power
(Medium)
Industry Competitors
(High)
Bargaining power of suppliers
Threat of new entrants
Threat of substitutes
Bargaining power of buyers
- Need large investments to setup
- IP protection
- Incumbents will retaliate or acquire the new entrants
- High switching cost
- Price sensitive and often demand upgrade to new technology
- Open source technologies
- Large numbers of firms are backward integrating
- Cost advantage is diminishing with the outsourced suppliers - Competition is based on price and
product and service portfolio coverage
- Consolidation is on the rise; big players are acquiring smaller or niche players
- Growth driven by M&A
- Competition is also based on differentiation of product and service Adapted form Porter’s Five Force Framework
SystemsIntegratorandServiceProvider
StorageDeviceandAppliancesManufacturer
DataWarehouseIndustryValueChainandProfitPool
DatabaseandDWSoRwareVendor
SupportandMaintenance
ThirdpartyApplica&onandAnaly&csSoRwareVendor
Prof
itabi
lity
Market Size
Oracle, Microsoft, IBM
Oracle, Microsoft, IBM, SAP and Teradata
Net
ezza
, Exa
data
3P
AR
Oracle, Microsoft, IBM, Accenture, Deloitte and Teradata
IBM, Accenture, Deloitte, EDS, Infosys and other Outsourcing Firms
Adapted from Profit Pool Framework by Gadiesh & Gilbert, 1998
54321
1
23
4
5
Businesses are planning to store more data than ever to compete successfully
Resulting in a massive growth in data storage requirements (According to Netezza)
According to TDWI report According to Netezza report
Businessesarefacingchallengeswithuncontrollablegrowthindata
Data Warehouse Appliance and the New Customer Value
A New Value with DW
Appliances
Reduce
Eliminate Create
Raise
- Solutions Complexity - Overall Cost (Capex and Opex) - Time to Readiness - Multi-Vendor Dependencies
- Need for redundant data warehouse solutions
- One stop solution for advanced DW with DW Appliance - Provide high capacity DW with storage up to 1.5 petabyte - Provide highly efficient Business Analytics solutions with MPP processing - Provide power to end users with industry specific analytics solutions like Retail, Biotech and Financial industries - High ROI at low cost
- Ability to store large amount of data in Data Warehouse and Data Mart format - Ability to process large amount of data at the maximum - Ease in customer usability
Changeincustomerdemandforadvancedanaly&csandeverevolvingtechnologiesins&tutedDataWarehouseApplianceindustrysub‐segment
Blue Ocean Strategy for Data Warehouse Industry
Riseofthemachine;TheDataWarehouseApplianceisaonestopsolu&onthatcanstoreenormousamountofdata,processatlightspeedandcapableofrunningadvancedanaly&cs
Customer value proposition Affordable cost
– Lox CAPEX and OPEX
Faster time to value – Plug in and go – Save time
Breakneck processing power – 100 times faster than traditional Data Warehouse system – Save time
Massive data storage capacity – Capable of storing 1.5 petabyte data
And customers faced many challenges Extremely complex system
– Many products from different vendors – Dependency on IT department – Slow performance
Data clutter – Valuable information lost – Lost ROI
Limitation in data storage
Expensive – SMB companies can’t afford
Traditional Data Warehouse system was complex and was a nightmare to manage
MarketPenetra*on 5‐20%
Maturity EarlyMainstream
CustomerAdapta*on Increasing
Withonly20%currentmarketpenetra&on,DataWarehouseApplianceisapoten&algrowthmarket
Source: Gartner Hype Cycle for Data Management Industry, 2010
Growing customer confidence on the DW Appliance is boosting the product visibility…
and is also improving the technology adoption of the Appliance products
SystemsIntegratorandServiceProvider
StorageDeviceandApplianceManufacturer
DatabaseandDWSoRwareVendor
SupportandMaintenance
ThirdpartyApplica&onandAnaly&csSoRwareVendor
Bigplayersareacquiringnicheinnovatorstocompeteoneverystepofthevaluechainbyforwardintegra&ng
Innovators IBM Oracle Microsoft Teradata
Innovators COGNOS SAS
Second Movers IBM Oracle Microsoft Teradata
Innovators Netezza Exadata
Second Movers IBM Oracle Microsoft Teradata HP
The race is on to compete and capture the evolving and profitable Data Warehouse Appliance market
Second Movers HP Infosys
Innovators IBM Oracle Microsoft Teradata
Second Movers HP Infosys
Innovators IBM EDS
ThedrivetofillinthegapsintheirApplianceproductporPolioresultedinDataWarehousemarketconsolida&on
Major M&A deals in the Data Warehouse industry
Missing in the M&A race is Big Blue - IBM
PenetratedMarket
ServedMarket
MissedMarket
‐ SmallandMediumBusinessesLookingforAffordableAnaly&csSolu&on‐ Purposedbuiltandonestopsolu&onapplianceataffordableprice(NetezzaandExadata)
‐ LargeenterpriseswithbothDatabaseandDataWarehouseneeds(Transac&onalsystems)‐ Clientswithexpensiveandmul&‐&erIBMdatabaseanddatawarehouseproductsuites(DB2,Bladeservers,ISASorInfoServerandCOGNOS)‐ Longandcomplicatedimplementa&onlifecycle
‐ Largeormediumenterpriseswithsomeanaly&csneeds‐ Mediumbudgetanaly&cssolu&ons‐ DisparatesoRwareandhardwaresolu&onsfromcompe&ngvendors
ProductCoverage
Strong
SoRware‐DB2,InfoServer/ISAS,COGNOSandotherspecializedanaly&csapplica&ons
Hardware–BladeServer
Services–6000trainedconsultants
Missing
IBMiscurrentlymissinginac&oninthismarketsegment
Withrapidindustryconsolida&onandcapabilitygap,IBMismissingoutontheopportuni&esintheDataWarehouseindustry…
MarketCoverage
inaddi&on,challengerssuchasNetezzaisclosinginthecompe&&vemarket
Injustfouryears,costleadershipandproductdifferen&a&onhelpedNetezzaevolvedfromanicheplayertoaleaderintheDataWarehouseindustry
NetezzahasoutdonedatagiantssuchasMicrosoRandSybase,andclosingintowardsIBM…
IBMisfeelingcompe&&vethreatforitsmarketincumbency
Source: Gartner Magic Quadrant
Strategy Opportunities
Leaders
Growth by acquisition Deter competition
Capture evolving market Increase market share Increase customer and
geographical foot print Increase customer dependencies
and life-cycle by cross selling
Challengers
Collaboration with industry leaders
Create niche and differentiation
Merge with leaders Continuous innovation
and patent portfolio
Premium pricing because of differentiation
Become a supplier or integrator for the leaders
Increase the sale-off value
M&Aisthenaturalcourseofac&onwhenchallengersarethreateningtheincumbencyofmarketleaders
FactorsdroveIBMtoacquireNetezza
Compe&&vePressure
TechnologyPatents
CompleteProductPorPolio
GlobalGrowthinAnaly&cs
MarketforcescompelledIBMtojointhepurposebuiltDataWarehouseAppliancerace
Netezza’sacquisi&onpriceof$1.7B(6.5xsalesmul&ple)isinlinewiththerecenthighgrowthdataindustrytake‐outmul&ples
Date Acquirer Target PremiumPaid OfferEnterpriseValue
EV/SalesMul*ples
09/20/2010 IBM Netezza 9.8% $1.7B 6.5x
09/02/2010 HP 3PAR 242.0% $2.4B 9.8x
07/08/2009 EMC DataDomain 92.2% $2.1B 5.4x
Source: Morgan Stanley Report
Highly optimized analytics
Multi vendor enterprise solution
DB2, COGNOS and other products
Specialized Data Marts
Transactional and Analytics
SAAS and Cloud offering
Existing IBM Data Warehouse Capabilities
Netezza Data Warehouse Appliance Overlaps
Data Mart offerings
Monitoring Solutions
In database and in memory analytics
High speed processing and storage
Capable of running with both expensive proprietary storage and off the shelve affordable storage
Advanced analytics
Withminimalfeatureoverlaps,IBMhasnowcompletecoverageoftheDataWarehouseandappliancemarket
DatabaseandLegacysolu&on
DataWarehouseandAnaly&cs
AdvancedAnaly&csandAppliance
SoRware Hardware&Storage Services
ImplementMarke&ng/Sales
IBMandNetezzaValueChainInterrela&onshipandValueCrea&on
R&D/Innova&on
MarketResearch
SoRwareDevelopment
BuildHardware
SupportandService
ImplementR&D/Innova&on
MarketResearch
SoRwareDevelopment
BuildHardware
SupportandService
IBM
Netezza
Marke&ng/Sales
IBMwillu&lizeitscapability
Sharedcapabili&es
ShadowedChevronNetezza’sredundantac&vi&eswillbeconsolidatedbyIBM
IBMandNetezzatogethercantrulycreatevaluefortheircustomersandshareholdersbyleveragingeachothers’competencies
Synergies Complementing product capabilities will help IBM cover the
complete market segment IBM’s deep pocket will help Netezza’s long term R&D and
product planning
Netezza’s patents will strengthen IBM’s market leadership
IBM’s global market reach will help Netezza enter new markets
IBM can leverage its consulting workforce to create Appliances related new service offerings – Capable of storing 1.5 petabyte data