Oracle's New Foes: NEC and Netezza

Netezza, a small database computer maker, is partnering with Japan's NEC to challenge Oracle in the market for database computers.
Posted February 4, 2010
By

- Reuters



BOSTON (Reuters) - Netezza Corp, a small maker of database computers, is teaming up with Japan's NEC Corp to take on Oracle Corp in the market for database computers.

The tie-up comes partly in response to Oracle's purchase of Sun Microsystems, which puts the world's No. 3 software maker in the hardware business for the first time.

NEC will build database computers that allow companies to store and analyze data about their operations using NEC blade servers and Netezza software, the two companies said on Wednesday.

Netezza currently only sells database computers that it builds on its own. More than 3,000 NEC salespeople will sell the new computer, compared with the 150 who sell Netezza's equipment at the moment.

Netezza Chief Executive Jim Baum said his company will earn higher margins on the machines that NEC sells because licensing its software is a more profitable business than building computers. He declined to say how long it would take for the deal to boost margins.

The Marlborough, Massachusetts, company builds its database computers using hardware that it buys from International Business Machines Corp. IBM does not help Netezza market the computers.

Baum said that he hoped to establish similar partnerships with other server makers as he looks to better compete with Oracle, which last week closed its $7.5 billion purchase of No. 4 server maker Sun Microsystems.

Other server makers include Hewlett-Packard Co, Dell Inc, Fujitsu Ltd and Cisco Systems Inc

Oracle sells a database product that competes with Netezza's. It originally manufactured that device using servers made by HP, but started using Sun hardware soon after it agreed to acquire the company in April 2009.

Oracle has not disclosed how many of its 110,000 employees will sell Sun hardware, but Chief Executive Larry Ellison last week said he planned to hire another 2,000 salespeople to focus on selling that division's equipment.

"This will be an interesting story. How is the industry going to organize to fight Oracle?" Baum said.

Teradata Corp also sells database machines.

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