The last few weeks have seen some major changes in Microsoft BI. There was the Datallegro acquisition, the announcement that Bill Baker was leaving, and the release of SQL Server 2008. For me, the first two changes are likely to have the most impact. SQL Server 2008 is well covered on the Microsoft Web site and so I won't address this topic here.
The acquisition of Datallegro created a significant amount of interest, and over the last two weeks I have discussed the acquisition with a wide range of people. Although opinions vary, some general consensus has emerged from those discussions.
The first question is why did Microsoft acquire Datallegro? The answer is that Microsoft wants to market SQL Server as a solution for large-scale data warehousing, and to do this they need to compete with the main DBMS vendors who have massively parallel database products. The Microsoft research group in San Francisco was spearheading key efforts to expand SQL Server in this area, but with the tragic death of Jim Gray it would appear the group lost momentum. To regain this momentum, Microsoft felt it needed to purchase an MPP database appliance.
Why Datallegro? There are a wide range of database appliances on the market, but some of them use proprietary hardware and software techniques, and many of them are tightly integrated into the underlying system. What Microsoft needed was a conventional relational DBMS appliance where they could quickly replace Linux by Windows, and the open source relational DBMS by SQL Server. A smaller number of appliances fit this requirement. Datallegro was one of them, and as we saw the ultimate winner.
What has Microsoft bought? This is a more controversial question. The first thing to note is the purchase price. The rumor mill reports the number to be $275 million. From my perspective this is a staggering sum for a company with a limited track record in data warehousing and few customers. Many people I spoke to were appalled by the sum paid by Microsoft. The feeling is that Microsoft purchased a marketing position rather than any real technology. One shouldn't of course underestimate the power of this marketing position. Whereas I don't think IBM or Teradata will feel threatened by the acquisition, it does put Oracle in a difficult position.
Oracle has spent years trying to sell its shared everything solution as a competitor to shared nothing MPP approaches for data warehousing. The result is that it is losing market share to competitors such as IBM, Teradata and appliance vendors in the high-end data warehousing sector. From a marketing perspective, Microsoft is now adding to this competitive pressure. Oracle now has the choice of eating humble pie and acquiring or building an MPP solution, or seeing the continuing erosion of its large-scale data warehousing market share as customers see the benefits of alternative solutions. My money is on Oracle burying its head in the sand and doing nothing.
The remaining question is whether Microsoft will succeed in using the Datallegro acquisition to penetrate high-end data warehousing. Given that SQL Server 2008 has just shipped, it means that the next release of SQL Server will not be for about another three years. A lot can happen in that time. Stuart Frost, the CEO of Datallegro, disputes this three year figure in blogs he has written, but Microsoft has a more rigid development, test, and release cycle than startups like Datallegro do. Even if the SQL Server MPP capability can be put into an interim release, it is unlikely we will see anything for two years.
Another issue concerns how Microsoft is managing its data warehousing development. It would appear that the BI team in Redmond has ceded Microsoft's data warehousing strategy to the SQL Server Group. In turn, the SQL Group has set up a data warehousing center of excellence at the Datallegro HQ in Southern California. Datallegro has limited data warehousing expertise, and for Redmond to have this remote group driving its data warehousing strategy appears very risky.
This brings me to the departure of Bill Baker to become CTO of Visible Technologies. This is a major loss for Microsoft. Bill is a visionary, an incredible leader, and was the driving force behind putting Microsoft on the BI and data warehousing roadmap. Microsoft has now lost two key BI and data warehousing people, Jim Gray and Bill Baker. They are irreplaceable, and setting up a data warehousing center of excellence in Southern California doesn't come close to making up for this loss.
Posted August 13, 2008 6:57 PM
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