Peter Traynor recently sat with Phil Francisco, who is Netezza’s Director of Product Marketing, and Virginia Lux, Director of Marketing Communications, and discussed product development at the company.
Peter Traynor: Could you give me some background on what Netezza has been doing lately?
Phil Francisco: The name of our latest product is Netezza Performance Server. It’s a true data warehouse appliance; its purposely built to be a data warehouse from the ground up within one economical package and it includes the server, the storage and the database technology in one place.
We’ve been forerunners in this market space and we coined the term “data warehouse appliance”, and I would say we are the leading vendor in that market space right now. We’re on our third generation of product for about the last two years at this point and I think what we’ve been able to demonstrate is that we can continue to deliver best price/performance in the category and we have been able to grow out the capability of the product to serve the enterprise-class customers that we’re servicing with the product.
In the last seven months or so we launched an initiative called the “Netezza Development Network” that is really doing some very dynamic things. We have some features that will be coming out in May that we announced back in December that will enable people to essentially program the data warehouse appliance to provide advanced analytics functionality right down to where the data resides. It is unique to the Netezza architecture and unique to the value proposition that we bring. It’s offering another couple of orders of magnitude or performance gain over the traditional method of dealing with advanced analytics which is pull the live data out of the warehouse to some external device where you do the processing.
PT: How much can the individual user do there?
PF: It will be open to the individual users. We do not anticipate an individual user will be doing it though. Through the network of partners that we’ve cultivated, we’re anticipating that applications, vendors, SI partners and so forth will build targeted applications or targeted solutions for a set of clients or for an individual client that provides game changing performance for that particular application and push it right down to where the data is resident. So things like scored customer data, spatial information, XML data – all sorts of possibilities start to open up where you can get much higher levels of performance than you would with traditional data warehouses.
PT: Now what kind of verticals would typically be prominent among your customer segment?
PF: That’s a great question. I think we’ve had great traction in a number of verticals. I think telco from day one, is a phenomenal space for us to be in. We’ve also had great traction in the retail business as well as online providers and more recently in the last year or two, financial services. We have a number of very prominent customers in the financial services including the New York Stock Exchange.
Virginia Lux: And MasterCard as well.
PF: There are a couple of verticals I should mention as well; the federal space is another one and we’ve got some strong relationships there as well.
PT: The finance or the tax side?
PF: Both the civilian and the agency side.
VL: Actually Orange UK, a telco in the UK, was our first or second customer in the telco space.
PF: Just from customer count wise the most recent publicly announced count was a little bit over 140 and we’re continuing to grow from there.
PT: Organizationally, are you setting up new offices, expanding your sales force and so forth?
PF: We have a number of offices in the country and around the globe at this point and we’re really picking up sales traction in different locales. We’ve had offices in Washington D.C. and our headquarters are in Framingham, Massachusetts. We’ve also got an office in London which serves the Northern Europe region and we have offices in Sydney, Australia and Tokyo, Japan. We have a satellite office in Seoul, South Korea as well and we just opened an office in Munich, Germany.
The great news for the company is our ability to have gone public last July and get into the public marketplace so our lives are sort of an open book as our performance is out there for people to look at and see how we’re doing.
PT: It’s amazing how important valuation becomes as soon as you’re public.
PF: And also the ability to show a continuing track record.
VL: I think a key validation is the fact that a lot of our customers continue to come back and buy more. We have a lot of repeat business with our customers and our CEO likes to say that they buy us for performance and they come back to buy us for the personable-ness and simplicity of the system.
PF: That is absolutely true. They look at us for the initial purchase on a cost-performance basis. We’re really economical to bring in and we deliver very high performance against the needs they have in the business. The fact that it is truly an appliance means that it doesn’t require tuning, partitioning or building other types of tables and so forth.
PT: So you can bolt this on, more or less.
PF: Yes, one of the keys to the simplicity is that we can drop into a data center and in about 24 hours, the customer could be loading data. You can’t build a multi-terabyte data warehouse with anyone else or any other product in that amount of time.
PT: That sounds extraordinary. There has been a lot of activity of course, in M&A over the last couple of years. Is there anything happening in that direction and are you on the acquisition trail?
PF: There’s not so much M&A activity in data warehouse systems. I think that in the data warehouse appliance space it is sort of inevitable that there will be some sort of consolidation. A number of start-ups have been created out of our success; there’s been a number of people following in our wake but not everyone can be successful.
PT: But there is still no barrier to entry as it were, so that’s the issue. So you’re right, consolidation is quite inevitable.
PF: And also sometimes it’s better to be lucky than good and sometimes it’s better to be good and lucky at the same time. For whatever reason, when we came out, there was not a lot of competition or mindshare in this space so mainly it was us against the big “Goliaths” like Teradata, Oracle, IBM, and to some extent, Microsoft as well.
We were able to, without causing a lot of pain to them, grow some aperture and we also stuck to our knitting and did the work that was required so that we could get certified with all the major tool vendors who deliver ETL tools, BI tools, and analytical functions for customers.
Today when new start-ups show up in the marketplace, they’re competing with 10 12, or 15 other companies for the attention of those same third party tools and seeking certification with them. So there is a little bit of a mindshare barrier to entry and not just the cost basis but also just getting people’s attention span.
VL: And they’re competing against each other where we still typically always see the big guys we’re competing with.
PT: And there’s still a lot of revenue to grab in that space.
PF: Yes, it’s a nice space to be in.
PT: Are you listed on the NYSE?
PF: Yes, we’re listed on the Arca portion of the NYSE.
PT: Yes, the Arca is fairly new. What’s your stock symbol?
VL: NZ.
PT: I like those two letter symbols; they’re easier to remember. In terms of people and movement, are you doing anything at the top level such as people coming in from anywhere else?
PF: I don’t think there have been any major upheavals. Right now we’re very much in execution phase. It’s trite to say but it’s sort of a marathon that you’re in so we need to just keep on executing and innovating. My role in doing product management and product marketing is making sure that we stay ahead in price performance, feature capability and open up this appliance that we have for a whole wealth of different kinds of applications.
A year from now, I think people are going to be doing things with our system that we cannot even contemplate right now because it is not traditional data warehouse functions that they’re going to acquire.
PT: You emphasized price right from the start…
PF: I emphasized price performance because that’s what I think really matters. I can offer very low-cost, high capacity systems that don’t deliver high performance and there are players out there where that is their niche and marketplace. What we are really good at delivering to customers is a very high-performance solution at a very attractive price. So they can move their performance point for their business by 10 to a 100 times over what they have with their current data warehouse system – at a fraction of a cost to these other systems. That is really the key.
VL: And it’s not just the initial cost; it’s a low total cost recipe for the simplicity. There’s not a lot of DBA required.
PF: You don’t have to be building aggregate cables everyday, you don’t have to be doing data publishing or you don’t need to figure out when you’re doing an expansion, how you’re going to build your lungs for doing the data publishing.
There are a lot of things that people do on a day-to-day basis in database systems or data warehouse systems that we just don’t require of a user. We have this purpose-built thing that comes pre-packaged and you have a level of performance from the get go when you buy the NPS System.
PT: That sounds great. Is there anything else you’d like to add?
PF: I think you just have to continue to watch this space. We’re going to continue to innovate. We’ve shown a track record of being able to increase our price performance value to customers over and over again over the past three or four years and we will continue to do that as we go forward.
PT: Excellent. Thank you very much Phil and Virginia. It was a pleasure talking to you both.