Gartner lists 3 challenges for rebounding Teradata

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.

The next steps

Teradata's plan to fend off competitors includes several action items, but two really stand out:

1. Keep pace in developing and using cutting-edge technology like flash memory and MapReduce. Oracle has bragged about the speed of its new Exadata Version 2 database appliance, which uses flash memory cards connected via fast PCI Express (PCIe) cards to cache the most commonly-accessed data. Now Teradata is preparing to bring out a flash-based appliance of its own, the Extreme Performance Appliance 4600 (code-named Blur).

Blur is said to store data in flash-based solid-state disks (SSD) using conventional drive interconnects, rather than PCIe. While using PCIe would in theory give Oracle an advantage over Teradata, Oracle's other architectural compromises will render it slower than Blur, claims Scott Gnau, Teradata's chief development officer. (See his full argument here.)

"Applications that might have gone to a Complex Event Processing (CEP) engine or in-memory database, we can handle with Blur," he said.

Forrester's Kobielus said he is "impressed" by Blur, which he said may be released by Teradata as early as the current quarter.

On the trendy area of MapReduce/Hadoop data processing, Teradata already enables users to crunch large, semi-structured data sets through MapReduce-like functions performed inside or outside the Teradata database, says Gnau.

Teradata is also working on new geospatial and temporal capabilities that will be added to the next release, Gnau said.

2. Ratchet up the marketing war. Teradata officials say that the company is going on the counteroffensive against its chief nemesis, Oracle, and some of its rising competitors.

The latter include GreenPlum Inc., which touts an "enterprise data cloud" that it claims will end the need for siloed, unmanaged data marts. "That sounds consistent with Teradata's strategy from 1979 of consolidating the enterprise data warehouse," said Darryl McDonald, Teradata's chief marketing officer.

Teradata released a feature last fall that's designed to let users test and run analyses inside the enterprise data warehouse without having to commit to a full data mart. "So we've been there and done that," McDonald added.

He also contended that Cloudera Inc., which is aiming its easy-to-use Hadoop tools at mainstream enterprises, will have a hard time competing against "the robust tools and infrastructure that we provide."

Regarding market leader Oracle, Gnau said, "We've been competing and winning against Oracle for years and will continue to do so. Oracle Exadata has been on the market for over a year, and although there has been much marketing hype there are still very few [Exadata] systems in production for data warehousing. Oracle recycles their material to disguise the lack of new Exadata customer wins."

McDonald says that Oracle's acquisition of Sun could lead the database vendor to show favoritism toward Sun hardware, which would wreak havoc on Oracle's other, still-key partnerships.

"You can imagine how their ex-hardware partners are now trying to position how to compete against Oracle," he said. "IBM, HP and others have a big part of their business in the OLTP market and aren't going to go down easily."

Eric Lai covers Windows and Linux, desktop applications, databases and business intelligence for Computerworld. Follow Eric on Twitter at @ericylai, send e-mail to or subscribe to Eric's RSS feed.

Copyright © 2010 IDG Communications, Inc.

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