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Microsoft to acquire data warehouse appliance specialist DATAllegro

Microsoft will acquire data warehouse appliance vendor DATAllegro to further bolster SQL Server, its relational database management system and part of its core business intelligence platform.

In its third business intelligence-related deal this year, Microsoft said yesterday it plans to acquire data warehouse appliance vendor DATAllegro to further bolster SQL Server's data management capabilities.

DATAllegro's data warehouse appliance boasts an open hardware platform designed for large data volumes. With an "ultra-shared nothing" architecture based in part on Ingres' open source database, it can query up to hundreds of terabytes on a single system, according to DATAllegro.

Microsoft plans to incorporate DATAllegro's data warehouse appliance with SQL Server, its relational database management system and part of its core business intelligence (BI) platform. DATAllegro's open architecture makes it "ideally suited to integrate with Microsoft SQL Server," Microsoft said in a statement.

"This acquisition extends Microsoft's leadership in data warehousing," a Microsoft spokesman said in an email. "DATAllegro provides Microsoft a great opportunity to accelerate its Data Warehouse roadmap and leapfrog competitors."

Mark Beyer, an analyst with Gartner Inc., said DATAllegro is a good fit for Microsoft given its nonproprietary hardware design. "Microsoft is not going to invest in a proprietary hardware platform," he said.

The acquisition, Beyer said, will give Microsoft customers the ability to scale up to very large data warehouses and run multiple queries across the same environment simultaneously thanks to DATAllegro's massively parallel processing (MPP) capabilities.

Also intended to improve SQL Server's data management capabilities, Microsoft announced plans to acquire Israeli data quality startup Zoomix earlier this month. The software giant also finalized its purchase of enterprise search specialist Fast Search & Transfer in April.

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 A preconfigured set of hardware and software usually designed to handle just one type of data domain, data warehouse appliances require less customization and are quicker to deploy than traditional data warehouses and data marts.

Companies are increasingly turning to data warehouse appliances for specific data management and analytic functions, such as bulk data loading and multidimensional OLAP queries, according to a recent Forrester Research report.

Mark Whitehorn, a consultant with U.K.-based PenguinSoft Consulting, said data warehouse appliances "have a superb use in particular niches, so therefore for Microsoft not to have this type of technology in its lineup was looking like a big hole."

The deal to acquire DATAllegro is smart one and "clearly demonstrates that Microsoft is serious about delivering an appliance-based SQL Server solution for data warehouse and business intelligence," wrote James Kobielus, a Forrester analyst, on his blog following the announcement.

In an interview, Kobielus said he expects it will take Microsoft between six and 12 months to integrate DATAllegro's appliance with SQL Server, and that Microsoft will likely not enhance DATAllegro technology in the meantime.

Both Whitehorn and Kobielus expect the deal to usher in a period of "rapid" data warehouse appliance consolidation, as Kobielus put it, as vendors look to capitalize on the growing popularity of data warehouse appliances.

"We expect many enterprise data warehouse incumbents to acquire data warehouse appliance pure-plays, both to scale and accelerate their existing solution portfolios, and also to address the growing midmarket for cost-effective modular solutions," Kobielus wrote.

The current data warehouse appliance market is split between best-of-breed vendors including Greenplum, Netezza, Teradata and -- until now -- DATAllegro, and mega-vendors including IBM and Oracle. IBM re-launched its enterprise data warehouse portfolio as data warehouse appliances in March 2007, while Oracle followed suit, introducing appliance-like data warehouses of its own via partnerships with Dell and Sun Microsystems, the following September.

Kobielus said Oracle in particular is "going to look into possibly a real splashy acquisition like a Netezza or a Greenplum so they can bring a name brand into their appliance portfolio."

Gartner's Beyer disagreed, noting Teradata, Oracle and IBM have solid data warehouse appliance offerings already. "We are of the opinion that you don't just buy people because they're left," Beyer said.

Neither Aliso Viejo, Calif.-based DATAllegro nor Microsoft revealed terms of the deal or when they expect to complete it, but did say most DATAllegro employees will join Microsoft following the acquisition.

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