Netezza: Believe the Hype?

By Baselinemag  |  Posted 2005-07-08 Print this article Print

Netezza has a limited track record, but customers say the startup has backed up its sounds-way-too-good-to-be-true claims.

A system up to 50 times faster than the competition, at half the cost—that's the sounds-way-too-good-to-be-true marketing spiel of Netezza, a data warehouse startup now in its fifth year. Can it back up its swagger?

Netezza made a believer out of Ahold USA, which operates 1,000 retail grocery stores. Al Clevenger, director of data management, needed a faster data warehouse for analyzing customer purchases than the company's existing system, which was running the Oracle 8i database on four IBM servers. Some reports took 18 hours; one required 72, broken into nine eight-hour pieces.

Clevenger says Netezza's small size was a concern at first. But his team grew more comfortable after talking to reference accounts, including Shoppers Drug Mart, a Canadian drugstore chain.

The clincher: Ahold ran the 72-hour query on Netezza's system, which did it in one four-hour pass. "We were like, 'Where do we sign?'" Clevenger says. "The performance was just awesome." On top of that, the system was two-thirds the cost of the Oracle-based data warehouse, including ongoing support and maintenance.

Others also gush about Netezza's speed. "It's borderline mind-boggling how fast this thing is," says Mike Coakley, vice president of marketing technology at Epsilon, a database marketing firm. He says Netezza's system takes 45 minutes to perform a series of queries on 250 million records that a 16-processor Oracle system would need more than six hours to complete.

But a fast finish doesn't win over everyone. Netezza's system "seemed like a 'Teradata Light' solution ... We were concerned about scalability," says Terri Kowalchuk, director of business intelligence at T-Mobile USA, which picked Teradata instead. Teradata certainly has put in more miles: It counts 750 customers worldwide, compared with Netezza's 29.

Netezza, though, listens to customers and has constantly improved its software, says Gary Feierstein, vice president of information technology at Premier, a health-care buying consortium. For example, based on customer feedback, Netezza added a feature to segment users by group, so one complex query won't slow down the whole system.

But Feierstein hasn't totally flipped to Netezza—Premier runs IBM's Red Brick Warehouse software for several of its data-analysis applications. As he explains: "We didn't want to put all our eggs in one basket."

Data Warehousing

200 Crossing Blvd.
Framingham, MA 01702
(508) 665-6800

TICKER: Privately held


Jit Saxena
Prior to co-founding Netezza in 2000, he was CEO of Applix, a developer of analytical customer relationship management software. Before that, he was in charge of software products for Data General (now part of EMC).

Bill Blake
Senior VP, Product Development
Joined in 2002 after heading Compaq's high-performance technical computing division.

Netezza Performance Server (NPS) 8000 data warehouse appliances, which preprocess queries on individual storage units, provide 1 to 27 terabytes of raw storage capacity; 50- and 100-terabyte versions are scheduled to be released by the end of 2005.
Reference Checks

Ahold USA
Al Clevenger
Dir., Data Management
(864) 987-5600
Project: Grocery store company runs an NPS 8250 data warehouse, which has 224 processors and 9 terabytes of disk storage, to analyze customer purchase data.

Gary Feierstein
VP, I.T.
Project: Health-care purchasing consortium based in San Diego with 400 member hospitals has five NPS systems to query clinical and operational data.

Vibrant Solutions
Jim Hayden
VP, Business Intelligence
(703) 270-2000
Project: Provider of data-processing services for telecommunications companies, including Verizon, uses Netezza's system to analyze call-record information.

Mike Coakley
VP, Marketing Technology
Project: Database marketing company first installed Netezza's system in January 2003; it runs five NPS boxes to let clients query consumer data.

J. Craig Venter Science Foundation
Marshall Peterson
Project: Genetic medicine research organization in Rockville, Md., has used Netezza for various projects, including analyzing seawater samples to identify genes in microbe species.

Lance Williams
Executive VP
(301) 429-4156
Project: Database marketing agency in Lanham, Md., uses Netezza's data warehouse to generate marketing campaigns for several clients.

Executives listed here are all users of Netezza's products. Their willingness to talk has been confirmed by Baseline.
Revenue, 2004 (est.): $36M
Sales growth: 100% from 2003 to '04
Expected profitability: Q3 2005
Total funding: $68M in four rounds
Investors: Matrix Partners, Charles River Ventures, Battery Ventures, Orange Ventures, Sequoia Capital, Meritech Capital Partners

Business Objects, Cognos, Informatica, MicroStrategy

Retail: Ahold USA, Amazon.com, Shoppers Drug Mart, The TJX Cos.
Telecommunications: Orange, Nextel Communications, Telus Mobility
Internet: CNET Networks, Google
Marketing services: Acxiom, Epsilon

Framingham, Mass. (headquarters); McLean, Va.; Bracknell, England; Sydney, Australia


2000 Netezza founded
2002 Ships first product in September
2003 Raises $15M third round
2004 Opens U.K. office
2005 Raises $15M fourth round

Sources: Company Reports; Baseline research


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