Analysis: Behind Microsoft's DATAllegro Acquisition
You've already snapped up Microsoft-branded mice, keyboards and gaming consoles. Is a Microsoft data warehouse (DW) appliance in your future?
You've already snapped up Microsoft-branded mice, keyboards and gaming consoles.
Is a Microsoft data warehouse (DW) appliance in your future? That's just one question triggered by Microsoft Corp.'s acquisition on Thursday
of DW appliance stalwart DATAllegro Corp.
Just why Redmond grabbed DATAllegro is a matter of some debate. DATAllegro,
like DW appliance pioneer Netezza Inc., was among the first wave of vendors
to champion the turnkey DW appliance model. In addition, DATAllegro was arguably
the first appliance player to shift production to all-commodity hardware from
OEMs such as Dell Computer Corp., Cisco Systems Inc. and EMC Corp. (Rival Netezza
still uses "commodity" PowerPC chips in its appliance architecture.)
Since then, a raft of players -- InfoBright Corp., ParAccel Inc. and Vertica
Inc., among start-ups; Hewlett-Packard Co., IBM Corp., Oracle Corp. and Sybase
Inc. among established vendors -- have also taken the DW appliance plunge.
Perhaps the driver was that DATAllegro gives Microsoft a symmetrical counter
to relational database rivals IBM and Oracle on the DW appliance tip. After
all, Big Blue has been shipping its DB2-based Balanced Warehouses (nee, Balanced
Configuration Units) for four years now, while Oracle -- after years of informally
marketing "reference" warehouse configurations that it developed in
tandem with hardware partners such as HP and Sun Microsystems Inc. -- announced
its first explicit DW appliance program, the Oracle Optimized Warehouse, last
September. Perhaps the Redmond giant perceived a DW appliance gap: It could
counter IBM's and Oracle's efforts in the data warehousing low-end (the sub-
or single-TB range) but was running out of gas in the DW high-end.
DATAllegro CEO Stuart Frost, for his part, said that's precisely it. "[DATAllegro]
is fundamentally a high-end play. It's fairly common knowledge that Microsoft's
share of the market above 10 TB is much smaller than their share below that
level," he said, stressing that "SQL Server has certainly improved
greatly since SQL Server 2000, and SQL Server 2008 is a great SMP product. But
that's all it is: SMP. Clearly we take [SMP] in a whole new dimension of scale-out."
Frost noted the companies' history of partnership: Redmond first approached
DATAllegro with the suggestion that the two companies join forces to deliver
an accelerated version of SQL Server. In the midst of that, Frost said, Microsoft
and DATAllegro shifted gears, talking up a plan to develop reference architectures
-- just as Oracle did with its OOW push -- for SQL Server in certain hardware
configurations. Buy-out talks followed, he noted.
"Reference architectures are the way major vendors have co-opted the appliance
story. A big part of why [Microsoft] bought us is that we have the expertise
and the ability to take that [reference architecture] to a whole new level and
leapfrog Oracle in [terms of] getting that reference architecture right,"
Were scalability and reference architectures the prime drivers? No one knows
for sure -- but analysts are speculating. Consider veteran data warehouse architect
Mark Madsen, a principal with consultancy Third Nature Inc. and author of several
data warehousing books, who thinks the DATAllegro deal does, in fact, boil down
to an issue of high-end scalability. DATAllegro, with its homegrown DW technology,
had it. Microsoft, with its credible -- but, compared to offerings from Oracle
and IBM, immature -- SQL Server database, didn't.
"It's the missing high-end scalability for SQL Server. [Microsoft] had
nothing to compete with Oracle or IBM. Now they do," Madsen said. He also
noted that Microsoft should have the goods to compete with Oracle and IBM "in
three years, when the next rev of SQL Server comes out."
The good news, from Microsoft's perspective, is that DATAllegro -- unlike competitor
Netezza, for example -- isn't tied to any specific hardware platform. It does
depend on some special driver configurations, Madsen conceded, but not extensively.
Furthermore, driver dependencies probably aren't anything that would prevent
Microsoft from pushing its SQL Server-derived DATAllegro technology on to any
of its existing partner platforms.
As for Madsen's timetable, Frost is far more sanguine. "It's not going
to take years, as some people in the blogosphere are predicting," he said.
"Just from [the integration work] we've already done, we've actually found
that it's going to be pretty straightforward. All of the hooks are there already
[such as] the APIs. We don't have to change a line of code in SQL Server."
He continued, "Yes, we'll have to change some of our query optimizations
to make it run better with SQL Server. In most cases, however, it's that much
easier [than working with Ingres]. SQL Server is just that much more sophisticated,
[so things such as] join capabilities, I/O -- basically all of those things
that we used to have to work around in Ingres -- we can just pass a lot of that
through to SQL Server without optimizing it."
The more vexing question involves DATAllegro's software special sauce, which
is based on Ingres and Linux, two technologies that are largely unpalatable
-- if not anathema -- to Microsoft. "DATAllegro's code is on Ingres and
Linux, but as I understand...[it], it's more layered on top than hooked deep
inside like [rival appliance architectures such as] Greenplum or Netezza,"
Madsen said. "It certainly doesn't run on Windows or C#/.NET or on SQL
That's true, too, Frost conceded, but DATAllegro is really more of an architectural
vision that doesn't depend on any particular technology prescription. For this
reason, he argued, the move from Ingres and Linux to SQL Server and Windows
-- while far from non-trivial -- shouldn't be a showstopper.
"We took some decisions very early on, knowing that in such a large market
dominated by an incumbent, [that our] most likely exit was going to be [by way
of] an acquisition. So, for example, all of the communication between our end
nodes [which take in data] is through standard SQL, so pretty much any database
will speak the ANSI SQL that we use at that level. We do have some mechanisms
to do sideways movements of data, but we've found that SQL Server with its APIs
will allow us to port over pretty easily what we already have," he said.
As for the timing of the acquisition, Madsen, like other industry watchers,
is flat-out flummoxed.
For one thing, he pointed out, DATAllegro recently closed the books on another
round of venture capital (VC) funding, which likely boosted the price that Redmond
had to pay for it. He stressed that the DW appliance segment is teeming. It's
flush with vendors, ideas and -- to a degree -- with VC seed money.
That's bound to change: The market itself will contract, a natural culling
will occur and VC funds will flow to vendors that have the best shot at making
it. Why didn't Microsoft wait for this to happen, Madsen wondered. Why did it
overpay now for what it possibly could have had -- six months from now, a year
from now or 18 months out -- at a cheaper price? Madsen, like several other
industry watchers with whom we spoke, doesn't know. "It's very not-Microsoft,
so I don't get that part of it," he confessed.
There's another wrinkle here, too: Is a Microsoft-branded DW appliance in the
works? Microsoft's past forays into hardware have been niche-y and limited --
largely to avoid upsetting its Wintel OEMs. The company has had considerable
success with Microsoft-branded mice, keyboards and other accessories, for example.
Does it have any real interest in marketing full-blown DW appliances, or is
it just acquiring DATAllegro for its technology? Does it, in fact, plan to stop
selling DATAllegro- or Microsoft-branded DW hardware?
Frost, with the obvious disclaimer that he isn't yet speaking for Microsoft,
said yes. He explained that the DATAllegro buy signals a shift away from fixed-configuration
appliances to reference architectures (similar to what Oracle is doing with
its OOW initiative) -- a data warehouse vendor works with many hardware partners
to build, test, optimize and certify its offerings in specific hardware configurations.
To a degree, he suggested, that's where the appliance market itself is heading:
Not just Oracle, but Sybase -- with its IBM System p-powered Analytic Appliance
-- is another example in kind.
"The answer, really, is yes. It's pretty obvious, frankly. It makes a
great deal of sense. Microsoft is not in the business of selling big iron. This
is a lot of hardware, so why not partner with the existing vendors to deliver
it?" he said.