IBM acquired Netezza to enter the purpose-built data warehouse appliance market. The acquisition helps IBM gain capabilities in high-performance analytics on large data sets and establishes a leadership position in the growing data warehouse appliance industry. The $1.7 billion acquisition price for Netezza was in line with recent high valuations seen in other data-focused M&A deals. The combination of IBM and Netezza technologies provides customers with a complete portfolio of data warehousing and analytics solutions.
IBM acquired Netezza to enter the purpose-built data warehouse appliance market. The acquisition helps IBM gain capabilities in high-performance analytics on large data sets and establishes a leadership position in the growing data warehouse appliance industry. The $1.7 billion acquisition price for Netezza was in line with recent high valuations seen in other data-focused M&A deals. The combination of IBM and Netezza technologies provides customers with a complete portfolio of data warehousing and analytics solutions.
IBM acquired Netezza to enter the purpose-built data warehouse appliance market. The acquisition helps IBM gain capabilities in high-performance analytics on large data sets and establishes a leadership position in the growing data warehouse appliance industry. The $1.7 billion acquisition price for Netezza was in line with recent high valuations seen in other data-focused M&A deals. The combination of IBM and Netezza technologies provides customers with a complete portfolio of data warehousing and analytics solutions.
IBM acquired Netezza to enter the purpose-built data warehouse appliance market. The acquisition helps IBM gain capabilities in high-performance analytics on large data sets and establishes a leadership position in the growing data warehouse appliance industry. The $1.7 billion acquisition price for Netezza was in line with recent high valuations seen in other data-focused M&A deals. The combination of IBM and Netezza technologies provides customers with a complete portfolio of data warehousing and analytics solutions.
Tradi&onalDataWarehousesolu&onhelpscustomersinstoringvaluable businessdataandinextrac&ngstrategicinforma&onfromthedatacluBer Business Users
Business Intelligence/ Analytical Applications
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
COGNOS, Oracle, SAS, Microsoft,
Data Warehouse Databases
Oracle, Microsoft, IBM, Netezza, Teradata
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
Servers, Storage...
Company Operational Data Sources
Order
Sales
Marketing Accounting
Data Warehouse is a ~$9 Billion global industry, out of which US market contributes 50% Global DW Market Shares 2010
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&&onisbasedonpriceand product/serviceporPoliocoverage -Need large investments to setup
Barriers to Entry (Medium)
Threat of new entrants
-IP protection -Incumbents will retaliate or acquire the new entrants
Suppliers Power (Low)
Bargaining power of suppliers
Industry Competitors (High)
Bargaining power of buyers
Buyers Power (Medium)
-High switching cost -Price sensitive and often demand upgrade to new technology
-Large numbers of firms are backward integrating -Cost advantage is diminishing with the outsourced suppliers Threat of substitutes
Substitutes (Low) -Open source technologies
-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
Oracle, Microsoft, IBM, Accenture, Deloitte and Teradata
5 IBM, Accenture, Deloitte, EDS, Infosys and other Outsourcing Firms
Market Size
Adapted from Profit Pool Framework by Gadiesh & Gilbert, 1998
Businessesarefacingchallengeswithuncontrollablegrowthindata Businesses are planning to store more data than ever to compete successfully Resulting in a massive growth in data storage requirements (According to Netezza)
Changeincustomerdemandforadvancedanaly&csandeverevolving technologiesins&tutedDataWarehouseApplianceindustrysubsegment Data Warehouse Appliance and the New Customer Value Reduce -Solutions Complexity -Overall Cost (Capex and Opex) -Time to Readiness -Multi-Vendor Dependencies
Eliminate -Need for redundant data warehouse solutions
A New Value with DW Appliances
-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
Create
-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
Traditional Data Warehouse system was complex and was a nightmare to manage
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 cant afford
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
Withonly20%currentmarketpenetra&on,DataWarehouseApplianceisa poten&algrowthmarket Growing customer confidence on the DW Appliance is boosting the product visibility and is also improving the technology adoption of the Appliance products
MarketPenetra*on Maturity CustomerAdapta*on
520% EarlyMainstream Increasing
Source: Gartner Hype Cycle for Data Management Industry, 2010
Bigplayersareacquiringnicheinnovatorstocompeteoneverystepofthe valuechainbyforwardintegra&ng Database andDW SoRware Vendor Thirdparty Applica&on andAnaly&cs SoRware Vendor StorageDevice andAppliance Manufacturer Systems Integrator and Service Provider Supportand Maintenance
Innovators IBM Oracle Microsoft Teradata
Innovators COGNOS SAS Second Movers IBM Oracle Microsoft Teradata
Innovators Netezza Exadata Second Movers IBM Oracle Microsoft Teradata HP
Innovators Innovators IBM IBM Oracle EDS Microsoft Teradata Second Movers Second Movers HP HP Infosys Infosys
The race is on to compete and capture the evolving and profitable Data Warehouse Appliance market
ThedrivetollinthegapsintheirApplianceproductporPolioresultedin DataWarehousemarketconsolida&on Major M&A deals in the Data Warehouse industry Missing in the M&A race is Big Blue - IBM
Opportunities Capture evolving market Increase market share Increase customer and geographical foot print Increase customer dependencies and life-cycle by cross selling Premium pricing because of differentiation Become a supplier or integrator for the leaders Increase the sale-off value
Leaders
Challengers
Collaboration with industry leaders Create niche and differentiation Merge with leaders Continuous innovation and patent portfolio
PremiumPaid Oer Enterprise Value 9.8% 242.0% 92.2% $1.7B $2.4B $2.1B
EV/Sales Mul*ples 6.5x 9.8x 5.4x
09/20/2010 09/02/2010 07/08/2009
IBM HP EMC
Netezza 3PAR DataDomain
Source: Morgan Stanley Report
Withminimalfeatureoverlaps,IBMhasnowcompletecoverageoftheData Warehouseandappliancemarket Existing IBM Data Warehouse Capabilities Overlaps Netezza Data Warehouse Appliance
Highly optimized analytics Multi vendor enterprise solution Data Mart offerings DB2, COGNOS and other products Monitoring Solutions Specialized Data Marts Transactional and Analytics SAAS and Cloud offering
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
DatabaseandLegacy solu&on
DataWarehouseand Analy&cs
AdvancedAnaly&csand Appliance
SoRware
Hardware&Storage
Services
IBMandNetezzatogethercantrulycreatevaluefortheircustomersand shareholdersbyleveragingeachotherscompetencies IBMandNetezzaValueChainInterrela&onshipandValueCrea&on IBM Market Research R&D/ Innova&on SoRware Development BuildHardware
Marke&ng/ Sales
Implement
Supportand Service
Market Research
R&D/ Innova&on
SoRware Development BuildHardware
Marke&ng/ Sales
Implement
Supportand Service
Netezza Synergies Complementing product capabilities will help IBM cover the complete market segment IBMs deep pocket will help Netezzas long term R&D and product planning Netezzas patents will strengthen IBMs market leadership IBMs 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 IBMwillu&lizeitscapability Sharedcapabili&es ShadowedChevron Netezzasredundant ac&vi&eswillbe consolidatedbyIBM
