IBM In Deal To Acquire Netezza for $1.7 Billion

On Monday, September 20, 2010, IBM acquired Netezza, the data warehouse appliance global leader, for $1.7 billion (McDougall). This is a solid investment for IBM because Netezza allows for low-cost, and high-performance data warehouse appliances. Netezza would open up IBM’s offerings in the market for database and business intelligence platforms. This will help IBM’s Porter’s five forces model because it will lower its rivalry among existing competitors, giving them a competitive advantage. The bargaining power of the suppliers will also increase because supplying and marketing would become more efficient. I noticed that the addition of Netezza would also increase the power of the buyer’s because the products will be user friendly because of Netezza focus on the client, as well as, the business it is working with.

Netezza also provides advanced analytics applications including enterprise data warehousing, business intelligence, predictive analytics, and business continuity planning (Netezza). This kind of investment will strengthen IBM's value chain because it will make the primary value process, such as receiving and storing raw materials, making the product or services, and delivering the product and service run smoother. This will, in turn, lower the pressure of the support value processes because the management of IBM would have less to worry about because Netezza will be responsible for the primary value process of the company. Because Netezza has the ability to help IBM focus on understanding clients’ needs, it will help in the research and development of the products, human resource management, and service after the sale of the product.

Upon doing further research on the official Netezza website, I discovered their new product, Wave 2. This appliance was created in order to integrate the database, server, and storage into one system. Netezza simplifies the data warehouse and the analytics infrastructure. The data compliance of the Wave 2 includes controls, reports, and workflow. Not only is the Wave 2 the perfect product for business intelligence, it is also an environmentally friendly product, and, due to the increasing amount of data volumes, it has a special security system that allows organizations to see who is accessing information and why it is being accessed. It is also a fast system that is able to backup data and restore it at a very quick rate. I also found out that Netezza uses con-way freight, which reduces fuel consumption, and therefore, lower costs and increases profitability (Netezza).

Video on how Netezza and IBM will work together:

A statement from Netezza on its background and why it is an important part of a company’s life: “We introduced the world's first data warehouse appliance and challenged the status quo. We created a new market segment and set the agenda for an entire industry. And now, driven by our customers, we are developing solutions to solve bigger, more complex enterprise-wide challenges including global federation, data integration, legacy system integration, business continuity, advanced analytics and compliance. With our strong financial base, profitable business model, focus on growth and extremely enthusiastic ‘enzee’ community, you can be sure that Netezza will always be a strong partner for analytics, scaling with you as your data and demands grow.”

IBM’s investment in Netezza is bound to increase its profits because its overall affect on the value chain and the five forces model is a positive one.

Sources

Data Warehouse Appliance, Data Warehouse Appliances, and Data Warehousing from Netezza. Web. 12 Oct. 2010.

McDougall, Paul. “IBM In Deal To Acquire Netezza For $1.7 Billion.” Information Week. 20 Sept. 2010. Web. 12 Oct. 2010.