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Posted by James Kobielus on February 14, 2011
So you thought Neoview’s demise signaled HP’s exit from the enterprise data warehousing (EDW) market? You could not have been more mistaken.
Yes, HP recently abandoned that slow-motion train wreck after several years of anemic customer adoption and directionless product management. But you should regard the unlamented Neoview as little more than a blip in HP’s long-running campaign to deepen its presence in all things EDW. And you should consider today’s announcement that they’re acquiring Vertica Systems as a key building block in HP’s emerging new strategy in the EDW market. It remains to be seen what that strategy is, inasmuch as new HP CEO Leo Apotheker has not yet articulated a clear vision. Perhaps he’s playing close to the vest so as not to call attention to further acquisitions in adjacent segments, such as business intelligence (BI) and data integration (DI).
Before we launch into a discussion of what this deal means for both vendors and how it changes the EDW competitive landscape, let’s look into the particulars that were announced. HP will acquire one of the fastest-growing vendors in the EDW arena, a pure-play startup that rose so far so fast that they had the market presence to justify inclusion in the latest update to the Forrester Wave on EDW platforms, which was published last week. Though HP and Vertica have not disclosed the terms of deal, which is expected to close in the second quarter, it’s fair to assume that the Vertica product team will remain and play a key role in the IT powerhouse’s attempts to deepen its solution portfolio in advanced analytics, real-time business intelligence (BI), and data management. It’s also safe to assume that Vertica will be absorbed into the larger HP brand, sales, and service organizations. And Vertica’s innovative portfolio of EDW software, appliance, and SaaS/cloud offerings will almost certainly be retained and evolved under the new parent.
For HP, the Vertica acquisition represents a strategically critical step back into providing a full stack of integrated EDW offerings (supplementing HP’s recent announcements with Microsoft, to be discussed shortly). As we stated in the EDW Forrester Wave, Vertica has been aggressively challenging established EDW vendors with its scalable columnar-based solution portfolio for large enterprises and the midmarket. Vertica offers one of the most flexible set of EDW solution form factors on the market, with software, appliance, cloud, and virtualized versions of its portfolio. Just as important, Vertica continues to boost its impressive price-performance through a massively parallel architecture and an optimized, flexible storage layer. Its Vertica Database runs on multiple software and hardware platforms and supports considerable extensibility through in-database analytics, logical domain models, and other approaches. And it provides policy-oriented visual tooling for dynamic management and resource provisioning of mixed workloads across distributed deployments.
It remains to be seen whether HP, under its new CEO, will manage Vertica any more effectively than it did the Neoview product, but there is ample reason for hope. Vertica has a strong management team that rapidly built itself into a leading EDW pure play — alongside such rivals as Netezza (now part of IBM) and Greenplum (now part of EMC) — through a laser focus on scalability, performance, and reliability. Just as important, Vertica has a high-performance columnar architecture that it will now be able to develop further through a significant injection of R&D resources from its deep-pocketed new parent. In addition, Vertica will have every interest in tightly optimizing its columnar architecture for extreme performance on an all-HP hardware platform, just as Oracle has integrated Exadata exclusively with its proprietary Sun hardware platform. Consequently, it’s doubtful whether Vertica will maintain partnerships with non-HP commodity hardware vendors, if the follow-on from the Oracle-Sun hookup is any indication.
Sure, Neoview had a strong technical team, and the platform’s real-time massively parallel architecture had long since proven its ability to scale into the petabytes for the most demanding enterprise applications. But Neoview failed to gain significant customer adoption due to several factors that had little to do with its technical merits.
Fundamentally, Neoview was orphaned by ex HP CEO Mark Hurd early in its life and never recovered from that strategic inattention. Neoview was too expensive, had no clear competitive differentiators, suffered from an incoherent go-to-market strategy, and didn’t promise the high-volume revenue lift that drives many HP product initiatives.
Another factor behind Neoview’s lackluster market adoption was that HP lacked (and still lacks) the broader data analytics solution portfolio that it will need to bundle with its EDW platforms (past, present, and future) and support with its professional services offerings. As we noted in another recent Forrester report, full-stack vendors such as IBM, Oracle, and Teradata are now offering analytic solutions that combine their core EDW appliance platforms with preconfigured BI, advanced analytics, data cleansing, industry information models, and other data management applications and tools. Microsoft has also moved aggressively into analytic solution appliances and has partnered with HP on some of them, incorporating HP hardware and systems management tools but not the moribund Neoview technology in those offerings.
All of which points to the high likelihood that HP will also pull the trigger on near-term acquisitions in the BI, DI, master data management, and predictive analytics markets. HP’s ongoing partnership with Microsoft appears strong, but the Vertica acquisition throws an obvious complication into that relationship. Over the past several months, HP has significantly ramped up its partnership with Microsoft and now offers a growing family of EDW appliances that integrate SQL Server and other Microsoft software with HP server, storage, and other hardware products. Another twist in the HP partnership story is that, even while ramping up its Microsoft collaborations, the Silicon Valley behemoth has not backed away from partnerships with other EDW appliance vendors that offer HP hardware as the primary or an optional hardware platform in their solutions. As yet another layer of complexity, HP continues to grow its already-extensive EDW and data analytics professional services organization, which they have built from strategic acquisitions (e.g., EDS, Knightsbridge) over the past several years and which work closely with many EDW solution vendors, not just those with which HP’s product teams collaborate.
For Vertica, this acquisition is an absolutely essential step for it to survive in a market increasingly dominated by big-brand full-stack vendors — IBM, Oracle, SAP, Microsoft, EMC, and others — with deep pockets and global sales, marketing, service, and consulting ecosystems. However, HP/Vertica are not guaranteed to rock the EDW market unless they have the same laser focus on price-performance and solution packaging as their rivals. Neither HP nor Vertica has a strong track record in either of those areas, so Forrester urges cautious optimism regarding the long-range prospects for this hookup.
For the EDW market as a whole, the HP-Vertica deal is just the latest splashy announcement in a long-running industry consolidation. As we noted in the recent EDW Forrester Wave, enterprise customer demand for one-stop shopping has brought startups and even well-established EDW vendors into larger solutions providers. Several of the recent acquisitions involve hardware vendors acquiring or being acquired by EDW pure plays (Oracle purchased Sun Microsystems, IBM acquired Netezza, EMC picked up Greenplum, and now HP is acquiring Vertica). Some of the acquisitions involved established EDW vendors picking up key technology to improve scalability and performance (e.g., Microsoft’s acquisition of Datallegro for massive parallelism, SAP’s and HP’s of Sybase and Vertica, respectively, for columnar databases, Teradata’s of Kickfire for SQL query optimization acceleration).
In an HP context, how do the Vertica EDW offerings stack up, feature- and performancewise, to Neoview? That’s not the question you should be asking. Instead, ask how they’ll make headway in a market dominated by the vendors in the leaders group in the recently published Forrester Wave.
Vertica was the only one of the Forrester Wave vendors that didn’t quite make it that high in the scoring, though it ended up a Strong Performer. And that’s not too shabby.