Gartner lists 3 challenges for rebounding Teradata

Report, improved financials help data warehousing firm start 2010 on a bright note

The harsh winter seems to have so far bypassed the Dayton, Ohio, headquarters of Teradata Inc., which has been showered with good news over the past month or so.

For example, late last month, research firm Gartner Inc. listed Teradata as the leader in its closely watched Magic Quadrant for data warehouse database management systems. Teradata moved ahead of rivals Oracle Corp. and IBM in both of the key dimensions measured by Gartner: "ability to execute" (a measure of market share and financial resources) and "completeness of vision" (a measure of product features).

Gartner said Teradata's management software saves considerable administrative labor and lauded its lower-priced products and strong focus on the data warehousing business.

And two weeks ago, Teradata reported that its fourth-quarter 2009 profits were 6% higher than they were in the same period a year earlier, as growing services revenue offset weaker product sales, which the company blamed on last year's price war.

Teradata is predicting that its revenue, which fell 3% to $1.71 billion for all of 2009, will grow between 7% and 9% in 2010.

Investors appear to share the company's confidence. Teradata's stock price closed Friday at $29.83 per share, not far from its all-time high of $32.24, achieved just before Christmas. The company was spun out of NCR Corp. about three years ago.

Not all smooth sailing

Despite the recent good news, Teradata still faces three major challenges, says Gartner:

1. Fierce competition from mature database management systems, such as IBM DB2, Microsoft's SQL Server and Oracle's flagship database, in the market for data warehouses that are under 10TB.

"Many new end-user organizations deploying new or revised data warehouses will implement them with these competitors, based simply on enterprise standards, because they lack the experience base necessary to discern the more advanced requirements of mixed workloads, high availability and analytics optimization," wrote Gartner analysts Donald Feinberg and Mark Beyer.

2. Increasing competition from IBM, Netezza and Oracle for large data warehouse customers. Gartner noted that Teradata "has historically encountered little opposition" for its high-end data warehousing products, such as its 50 petabyte-capable Extreme Data Appliance 1550.

Teradata did respond to the high-end threats by, among other things, cutting prices and bundling more features into its products, said Forrester Research Inc. analyst James Kobielus, who noted that competitors are doing the same.

3. A "renewal in single-vendor appeal" is underway, and that could bode well for competitors that offer a complete stack of tools, including extraction, reporting and OLAP products. However, Gartner did describe as "false" competitors' claims that Teradata's technology is proprietary and doesn't play well with others.

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