What IBM sees in Netezza

September 20, 2010: 11:38 AM ET

Earlier today, IBM (IBM) announced it would purchase Netezza (NZ), a publicly-held Massachusetts-based data analytics company, for $1.7 billion.

For IBM, Netezza is the most recent of 23 acquisitions by the company over the last four years, amounting to $12 billion. (Last week, the company bought OpenPages, another company in Massachusetts that creates risk and compliance software for businesses.) Analytics technology enables companies to observe and analyze past business performance so they can better plan future strategies. IBM is clearly banking on the analytics business for growth -- it currently estimates the total annual market at approxmiately $100 billion. Analytics was up 14% in the second quarter, and as IBM general manager Arvind Krishna told The Wall Street Journal, the company is posting double-digit growth.

Netezza, which lays claim to more than 350 clients including Time Warner (TWX), Virgin Media (VMED), and eHarmony, should go a ways to bolstering IBM's ambitions. According to the company's release, Netezza's unique tech can handle complex analytic queries between 10 and 100 times faster than traditional systems, thus giving IBM further leverage in the quickly growing space.

"Our customers choose our appliances for their fast time to value and how they simplify analytics against big data," said Netezza President and CEO Jim Baum in a joint statement. "Together with IBM, we are looking forward to extending our capabilities to a much broader market."

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JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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