Re Data Warehousing:
Every small company that's ever pioneered a successful niche market - only to see the big boys come in to grab the cash - should be rooting for Red Brick Systems Inc.
Red Brick last month unveiled a new strategy to fight off larger rivals drawn to fast-growing data warehousing, complex software that helps companies make the best use of their databases.
In the last two years, the field has attracted such heavy hitters as Oracle Corp., IBM Corp. and Microsoft Corp. They're about 10 years behind Red Brick, but all are at least 150 times larger based on annual revenue.
But the smaller company may prove more nimble. It has beat the big boys by being the first player to package a database and data warehouse into one product, which it calls DecisionScape. It's a move to sell more software and services under the heading of ''business intelligence'' - a catch- all phrase for data analysis software.
''(DecisionScape) is a massive strategic shift,'' said Christopher Erickson, Red Brick chief executive. ''We're going to hit (business intelligence) head-on.''
Los Gatos, Calif.-based Red Brick had better.
''If they fail, the company goes away,'' said Robert Craig, an analyst with the Hurwitz Group Inc., a Framingham, Mass.-based researcher. Craig says the company is too small to compete in the conventional database field.
''The new strategy's success is absolutely critical,'' he said.
Kevin Strange, an analyst with Cambridge, Mass.-based market researcher Gartner Group Inc., agrees.
''They're failing miserably as a database vendor,'' Strange said. ''Their $43 million in ('97) sales is a drop in the bucket for this market.
''They stand a better chance in business intelligence because there's no gorilla in this market. But they're going to have to move fast.''
With DecisionScape, Red Brick is assembling all its data warehousing- related parts to appeal to customers. Rivals such as Oracle tout end- to-end service, but it's more hype than reality, Craig says.
He says the next three quarters are most critical in gauging whether Red Brick will succeed.
Though small, the company is no babe in the woods. Its pioneering data warehouse products have helped it rack up about 300 customers. And even with the larger rivals, Red Brick won a data warehousing contract in April with online bookseller Amazon.com.
The data warehousing market is expected to reach $1.88 billion in sales this year, up from $1.47 billion last year, says Dataquest Inc., a San Jose, Calif.- based market researcher.
Data warehouses have became all the rage, says Red Brick's Erickson. He says, figuratively, that ''companies were flying over the U.S., dropping leaflets about data warehousing and how easy it is.''
Oracle and IBM take a one-database-fits-all approach to data warehousing. But all-purpose databases mean trade-offs in terms of data warehouse performance, Erickson says. Red Brick tailors its databases to work with data warehouses.
''If you're going to solve a specialized problem, you need a specialized solution,'' Erickson said.
Customers are beginning to agree after struggling with the first wave of data warehousing products, says Merv Adrian, an analyst with Cambridge, Mass.-based researcher Giga Information Group. ''Companies are stepping back and saying this is harder and more complex than we thought,'' he said.
By merging the data warehouse with the database, Red Brick's system is easier to set up, Erickson says.
That approach could well be a winner with customers, says analyst Craig.
Customers want complex software simplified. Packaged software, or applications that don't have to be customized for each customer, has won a following.
But it's not easy. Software from different makers can't just be thrown into a box and expected to work smoothly. Red Brick has overcome that hurdle so far, says Giga's Adrian.
''They've (added) breadth without sacrificing depth,'' Adrian said. ''As long as they can maintain that balance, they can dart in and out and win business away from the big players.''
By the time Oracle reacts to the merged database- data warehouse approach, Red Brick will be on its third release, Erickson says.
''I think we're competing less and less head-on with Oracle,'' he said.
Red Brick could make inroads into Oracle-dominated companies, Craig says. It's always had strong technology.
''Comparing feature to feature, performance to performance . . . Red Brick will win, hands down,'' Craig said. ''Oracle can't touch them.''
The way companies use data warehouses is changing and creating an opportunity for Red Brick, Erickson says.
About two years ago, companies such as General Mills Inc. only wanted to use data warehouses to find out which cereal brand sold the best yesterday. Now, it wants to use data warehouses to help sell more cereal, Erickson says.
''It's this kind of quick change that allows us to stay ahead,'' Erickson said. ''The big companies - Oracle and IBM - treat data warehouse technology as a commodity. They tend to serve the market needs of two years ago, instead of what's happening today.''
But in a fast-changing field, it may be a bumpy ride for Red Brick.
''They're going to have an interesting transition,'' Gartner's Strange said. ''It's not going to be smooth.'' |
