Andy on Enterprise Software

Teradata steps into the light

January 8, 2007

In a logical move that I would say was overdue, Teradata finally became its own boss. It has long been nestling under the wing of NCR, but there was little obvious synergy between ATM machines and data warehouse database software, and so it seems to me eminently sensible for Teradata to stand on its own two feet. Running two quite different businesses with the same company is always a problem, as different business models lead to natural tensions as the company tries to accommodate different needs within the same corporate structure.

Teradata accounts for about USD 1.5 billion of revenue, around one third of NCR. The challenge for Teradata is growth. It has succeeded when others failed in the specialist database market, dominating the high end data warehouse market despite competing with Oracle, IBM and (to a lesser extent) Microsoft. Yet revenues have been pretty flat in the last couple of years, and there is new competition in the form of start-up Netezza, which although tiny compared to Teradata is nonetheless making steady inroads, and causing pricing pressure. Teradata has generally loyal customers though notoriously opaque pricing, which has enabled it to achieve good margins (especially on support), though its finances were never entirely clear as they were wrapped up with NCR. Splitting the company out will allow the market to value Teradata on its own merits.