At the 2008 Teradata Partners conference in Las Vegas, Mike Koehler the CEO of Teradata (NYSE:TDC) outlined why they are the best in the industry for data warehousing across a broad range of products. Coming out of a strong launch as a new publicly independent company in 2007 the market was clear for Teradata as pointed out in my blog Teradata:New Tiger in Analytics and New Choices Ahead. Those choices are more difficult as market consolidation, highly competitive environment and economic conditions have changed the opportunity. The pressure on Teradata to continue to grow and protect their market leadership position and customer base is very difficult.

Teradata has their hands full with extreme pressure from new competition in US market and was even welcomed by Teradata CTO, Stephen Brobst in his keynote as he stated competition provides positive pressure to innovate and improve their products. The competition is getting larger and complex for Teradata from providers like Greenplum, Kognitio, Netezza, ParAccel and continued competition of general database providers IBM, Microsoft and Oracle. Each of these general database providers have announced new appliances, made acquisitions or through partnerships are investing further to extend their position against Teradata. HP recently decided to extend their position by powering Oracle with the new Exadata appliance that has diminished HP’s own data warehouse appliance called HP Neoview. Even the use of open source in data warehousing has been brought to market through InfoBright that extends Sun mySQL to terabyte scale capabilities for small and medium sized business.  New innovations in the virtualization and management of data across sources for data warehousing has come out from Aster Data Systems who are beginning to demonstrate their prowess at sites like MySpace.

The competition in the US data warehousing market has to be having some impact to Teradata as second quarter financials showed some slow down in revenue within the Americas region from previous quarter and six month time periods in 2007. Despite this, Teradata is a key global provider with operations in 60 countries and able to help their customers in every region address a wide range of needs. What is not clear is how much they can continue to invest in global expansion while need to protect the local US market from competitors who are making traction in the same customers.

Teradata is responding with new range of options for data warehouse appliances. Teradata has a low end data mart appliance called 551 that can operate on other hardware platforms like Dell and HP and can spin up to 20 terabytes of disk for an approximate price of $67,000 per terabyte of data. The Teradata Extreme Data Appliance 1550 can scale to spinning 131 petabytes of disk for probably around 50 terabyte of actual data for a price of $16,500 per terabyte for data. The Teradata Data Warehouse Appliance 2550 can spin up to 512 terabytes of disk for a price of $99,000 per terabyte of data. The Teradata Active Enterprise Data Warehouse 5550 that can spin up to 157 petabytes of disk for probably around 50 petabytes of data for a price of $200,000 per terabyte of data. If your head is spinning on these numbers, so is mine. The point is that Teradata is extending their options to reach a broad range of customers needs. These configurations and numbers for their terabyte to petabyte processing will need to be validated with real world customer deployments but Teradata has a very large customer base with expanding data warehouse needs.

The next big thing is Teradata 13 and is expected to ship in first half of 2009 and was stated to have 75 new features and 7 million new lines of code. This version will have storage management enhancements, virtual storage for data warehousing, intelligent scanning for optimizing ad hoc queries, and finally support for geospatial data. Teradata is already claiming 30% improvement in performance that will be found from advancements like aggregation enhancements, count optimizations and collect statistics for analytics in business. They also have new intelligent scanning through dynamic partition elimination and aggregate join indexes. This new version will help address a lot of data management and administration along with keeping pace with other specialized and larger database providers. Teradata is also trying to ensure that the extract, load and transfer of data will be accelerated through advancements to the database technology with 30 percent gains. Touting a new RESET WHEN function within the database to reorder result set within the database and not needing to pull all the data out of the database and perform sorting. They are also integrating JAVA objects as database functions, and claims of better BI tool integration.  All of this sounds pretty good and beginning to be prepared for customer testing and will be part of the critical advancements needed to bring the value for the investment in Teradata.

To further help their customers, a new set of services and framework for data quality are being brought to market through partnership through the reselling of Trillium. A good step as organizations should spend more time on data quality to ensure the full value from their data investments. An interesting pick for a strategic partner since Teradata has strategically partnered with SAS on analytics but seems to ignore a key part of the SAS portfolio called DataFlux and even could have moved to work more closely with Informatica in data quality. Since the other large database and BI providers have data quality, maybe this is a sign of potentially acquiring Trillium.

In pushing the envelope, Teradata is demonstrating their next generation of storage access using a solid state storage advanced development system that uses a similar approach that is found in Apple iPod and iPhone. They believe this will become mainstream or more available in 2011 and could dramatically change how to get access to a range of data that is used more frequently without having to worry about traditional access and storage methods on spinning disk. This solid state advancement could be a big game changer for the storage business in data warehousing.

Teradata seems to continue to spend the majority of their focus on their database technology while spending a very small amount of time highlighting the importance of their solutions across finance, supply chain, customer and other business areas. Teradata is working to mix their vertical industry efforts with their line of business offerings but still not obvious to the general buyer or customer of Teradata how they can add value in specific solution markets. Teradata is also navigating a competitive landscape for business intelligence (BI) as many of their partners have been acquired and now compete with Teradata for data warehousing but providers like MicroStrategy and other up and coming providers like LogiXML, Pentaho and QlikTech could be new opportunities to examine.

For today, your data warehouse investment is under scrutiny to ensure you get the best bang for the buck. As the cost for memory, storage, and computing power decreases the pressure on technology providers like Teradata to lower prices continues to increase. Can Teradata escape the perception that they only address the largest of data warehouses and are very expensive to manage? Can they once again grow their US market or have to depend on other geographies to carry them forward? Can they escape the rumors and potential opportunity for SAP or others to purchase them?  There are new choices ahead for Teradata and much different than last year and higher stakes to their future and their envied position in the data warehouse market.

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Regards,

Mark Smith
CEO & EVP Research