Surprise, surprise; Microsoft intends to acquire another company. On July 24, Microsoft announced that it plans to purchase DATAllegro, a vendor that specializes in large-volume, high-performance data warehouse appliances. According to James Kobielus, a senior analyst at Forrester Research, the acquisition is a good move for Microsoft, and "definitely a good move for DATAllegro." Kobielus says that although DATAllegro is well established and well known, it was at risk of falling by the wayside if it didn't put itself up for acquisition.

So what does Microsoft want with a data warehouse appliance vendor? Well according to Kobielus, Microsoft intends to discontinue DATAllegro's open-source Ingres product and rebuild DATAllegro appliances so that they run on Microsoft's business intelligence (BI) stack. "Microsoft has made significant investments into data warehouse scalability in SQL Server 2005 and SQL Server 2008.  The acquisition of DATAllegro extends that and allows SQL Server data warehouses to grow to hundreds of terabytes," said a Microsoft representative.  Kobielus said that we probably won't see the product's roadmap until the Microsoft Business Intelligence Conference, which is October 6-8 in Seattle. He expects a Microsoft/DATAllegro data warehouse appliance to be released in mid-2009.

Microsoft is attempting to play catch-up with its competitors, most of which either currently offer a data warehouse appliance or are in the process of developing one. According to Kobielus, Microsoft is buying more than just DATAllegro—it's also buying credibility in the data warehouse appliance space. "Integrating DATAllegro’s nonproprietary hardware platform and flexible software architecture into Microsoft SQL Server will provide customers with the strongest offering in the market,” said Stuart Frost, DATAllegro's CEO. Kobielus agrees. "DATAllegro will be the product group within the SQL Server team that is responsible for bringing forward Microsoft's entire BI strategy," says Kobielus.

Needless to say, Microsoft and DATAllegro have an uphill battle ahead of them. In order to be a true competitor in the data warehouse appliance market, Microsoft is going to have to price its product competitively for small-to-midsized businesses (SMBs), who are increasingly going the appliance route because of their plug and play capability, says Kobielus.

Microsoft will keep DATAllegro's headquarters in Aliso Viejo, California, and plans to keep most of the company's employees on staff. Kobielus says that DATAllegro's legacy products will still be supported.