Will Teradata Win the "Big Data" Battle?

"Big Data" was one of the hottest tech buzzwords in 2011, and for good reason. By a recent IDC estimate, the volume of data created or replicated has more than doubled every two years. In 2011 alone, we collectively generated nearly 2 trillion gigabytes! And nearly 80% of that data will have passed through corporate systems at some point. Businesses are drowning in their own data, and those able to rise above the deluge and use it to their advantage will be handsomely rewarded.

"Surf's up!" says Teradata (NYS: TDC) , the world's largest company dedicated solely to delivering business analytics systems, aiming to dominate "Big Data" with its innovative data-crunching machines and industry expertise. Teradata offers data warehousing appliances and database software for a broad range of customer segments, from small businesses with relatively small amounts of data to world-class enterprises amassing millions of gigabytes of data annually, counting many of the world's top companies as their customers. Their value proposition is simple: Provide business insight and competitive advantage through customized data analytics solutions.

According to a 2010 report by IBM, "Industry analysts have sized the market for business analytics at $105 billion with a compound annual growth rate of 8%." Existing competitors are struggling to secure their piece of the pie, and other companies are coming on the scene with new "Big Data" products hoping to upset the big players. What sets Teradata apart from the competition?

Maximizing the investment
Teradata loves its customers, and according to the numbers, its customers love them back. Roughly 80% of 2008 revenue came from repeat business with existing customers. TDC's raison d'etre is to make its customers more successful. Success means more business, more business means more data, and more data means more opportunities for Teradata to serve.

More than 50% of Teradata's revenue in 2010 was from services, much of that, again, from existing customers. This is an excellent indication of the kind of relationship that Teradata maintains with its customers. Boasting an army of data analytics consultants and customer support personnel, Teradata is prepared to meet the needs of its customers and help them derive the most value from their investment.

At some point a company's data will exceed the capacity of its Teradata installation, and when that happens, Teradata will be there to provide even more horsepower for crunching that delicious data. Teradata's products are designed with scalability in mind. When a data warehouse reaches capacity, additional appliances can be quickly added to shoulder the additional load with no degradation in performance.

If a company has its own hardware and wants to run the Teradata database on it, there's an app for that. Teradata even offers a version of its database software, which is designed to run in the cloud -- a public cloud, such as Amazon.com's Elastic Compute Cloud or an organization's own private computing cloud. This approach allows companies to add computing horsepower instantly and as needed without the costs associated with physical hardware.

Powerful partnerships
What good is a brand-new big data appliance without, well, data? Not much. The challenge is getting that data from where it is -- any number of applications scattered among disparate business units, potentially stored in many different formats and database platforms -- into its new home. This is where Teradata's strong network of partners comes into the picture. Teradata has worked with most major database vendors to ensure that their systems can integrate seamlessly with Teradata's.

Even with first-class integration out of the box, for most organizations, piecing it all together can be a huge undertaking. Teradata has partnered with many of the top software consulting firms to provide the next level of customization and integration. These firms will see to it that all critical data is funneled into the data warehouse and that there is enough capacity to manage it. They will then set up the analytics necessary for businesses to track key metrics and gain insights.

Big opportunity
Much of Teradata's revenue comes from customers ranking within the top 3,000 companies worldwide. Only about 20% comes from new customers. Teradata's challenge will be to find new ways to tap into the burgeoning market of smaller companies seeking smaller-scale data analytics solutions. Learning the dominating needs of these smaller clients should provide Teradata with the critical information needed to build scalable solutions for more of them, and capture a bigger slice of the overall market.

Uniquely positioned to compete within the upper crust of the market, Teradata represents a unique pure play for investors in the booming "Big Data" business analytics market. Its top competitors, including Oracle (NAS: ORCL) , EMC (NYS: EMC) with its recent acquisition of Greenplum, and IBM (NYS: IBM) with its recent acquisition of Netezza, are hot on its heels. However, these huge companies are likely to focus on only the biggest customers. Teradata can protect its position there plus take it downmarket, cementing its advantages for years to come.

Will Teradata's strategy of customer intimacy win out in the "Big Data" Battle Royale? I like its odds.

At the time thisarticle was published Aaron Torgerson does not own shares of any companies mentioned. The Motley Fool owns shares of Amazon.com, International Business Machines, EMC, and Oracle.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com and Teradata. The Motley Fool has adisclosure policy.

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