Amazon said Wednesday it plans to offer data warehousing services that will be easier to use and much less expensive than those offered by Teradata, IBM and other more established players in the industry.
At stake is a large portion of the $34 billion global big data analysis industry, a business that is expected to create 4.4 million information technology jobs by 2015, including 1.9 million jobs in the United States, according to IT consulting firm Gartner.
Amazon is a new challenger to Teradata, while IBM is a long-time competitor. However, never before has IBM had such a large big data analytics presence so close to Teradata’s Miami Twp. world headquarters.
Teradata has roughly 350 local employees and 8,600 worldwide. Revenues for 12 months as of Sept. 30 totaled $2.6 billion.
In big data, business information is gleaned from a huge number of sources, including Twitter and Facebook postings, videos and more. That information is used to anticipate customer desires and gain a competitive edge in the marketplace. The new IBM Columbus center is expected to analyze information from millions of computer users.
Teradata officials declined comment Thursday. Its stock fell 3.7 percent on Wall Street Wednesday after the Amazon announcement, but bounced back a bit Thursday to close at $59.67.
Derrick Wood, an analyst who follows Teradata for Susquehanna Research, said Teradata has faced tough competition before from Oracle, IBM, and others and has delivered good results.
“There have been new competitive threats really since 2007, 2008,” Wood said.
Teradata “has tremendous domain expertise and a world-class engineering organization, and their focus is 100 percent on data warehousing,” he said. That’s not something that can be said of Amazon or IBM, he added.
Teradata’s stock “clearly” sold off on Amazon’s announcement, Wood said. But he calls it “far-fetched” to think Amazon will go to the “high-end enterprise level where Teradata competes.”
Amazon lacks sales and support and the expertise to compete at that level, he believes. Instead, he sees Amazon focusing on small- and medium-sized businesses.
David Salisbury, a University of Dayton management information systems professor, agrees that Teradata will weather the storm well, certainly in the short term.
But he thinks Amazon’s Redshift could be “serious” competition for established companies long-term. He said Amazon has already tested its data warehousing product, dubbed “Redshift,” with its own considerable retail catalog. The online giant already has significant data-handling and data-processing capabilities, he said.
“Remember, Amazon does data warehousing on its own stuff all the time,” Salisbury said.
It makes sense for IBM to build an analytics center in Central Ohio, which is home to government, insurance companies, financial services and plenty of math and engineering graduates, Salisbury said.
“The language of business is not English or Chinese,” he said. “It’s math.”
While Amazon may not attract the same kinds of clients Teradata does, at least initially, the data warehousing newcomer will offer competitive prices, he said.
“Anyone who can’t afford an IBM, Teradata, or Oracle solution will be on this,” he said of Amazon’s Redshift.
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