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Microsoft 'leapfrogs' Oracle with DATAllegro buy, analyst says

Move could spur more consolidation of data warehousing vendors

By Eric Lai
July 24, 2008 12:00 PM ET

Computerworld - Microsoft Corp. said today it will buy data warehouse appliance maker DATAllegro Inc., a move that one analyst said should help the software maker gain a technical edge over market leader Oracle Corp. in the high-performance business intelligence market.

Financial terms were not disclosed. Microsoft said it will integrate DATAllegro's technology into its SQL Server database, for which a new version, SQL Server 2008, is expected in several months.

"For the first time ever, Microsoft has leapfrogged Oracle at the high end of the database market," wrote independent database analyst, Curt Monash, a former Computerworld columnist, in an e-mail. "Of all the data warehouse start-ups, DATAllegro was the one whose technology could be most smoothly rolled into Microsoft's or Oracle's product line. Microsoft was smart to snatch DATAllegro up."

DATAllegro specializes in server appliances that come installed with a version of the Ingres database optimized to handle as much as hundreds of terabytes of data.

One DATAllegro customer reportedly runs data warehouses totaling 450TB.

"While several other data warehouse start-ups have achieved more overall customer success, DATAllegro is second only to Teradata in proven high-end data warehouse scalability," Monash wrote.

James Kobielus, an analyst at Forrester Research Inc., also praised the buy "as a smart one."

DATAllegro has "a strong product, robust technology, skilled engineering team, and world-class hardware partnerships (including EMC, Dell, Cisco and Bull)," he wrote. It also greatly boosts Microsoft, which was a "relative laggard" in the growing data warehousing appliance market, he said.

Kobielus added that this also "sets the stage for rapid data warehousing vendor consolidation" and driving companies such as "Oracle, SAP and HP, in particular, to make strategic acquisitions" of DATAllegro's competitors, which include Netezza Corp., Greenplum and Dataupia Inc.

The 5-year-old Aliso Viejo, Calif., start-up was probably not hurting for cash. It received nearly $20 million in Series D funding in May, and has taken about $64 million in venture capital since its founding.

Most of DATAllegro's team will remain in California, and existing customers will be supported.

This article has been corrected since initial publication to reflect that Ingres is in fact the underlying database for DATallegro.

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