Microsoft said today it will buy data warehouse appliance maker DATAllegro, a move that one analyst said should help the software maker gain a technical edge over market leader Oracle in the high-performance business intelligence market.

Financial terms were not disclosed. Microsoft said it will integrate DATAllegro's technology into its SQL Server database, for which a new version, SQL Server 2008, is expected in several months.

"For the first time ever, Microsoft has leapfrogged Oracle at the high end of the database market," wrote independent database analyst, Curt Monash, a former Computerworld columnist, in an e-mail. "Of all the data warehouse startups, DATAllegro was the one whose technology could be most smoothly rolled into Microsoft's or Oracle's product line. Microsoft was smart to snatch DATAllegro up."

DATAllegro specializes in server appliances that come installed with a version of the open-source PostGreSQL database optimized to handle as much as hundreds of terabytes of data.

One DATAllegro customer reportedly runs data warehouses totaling 450 TB.

"While several other data warehouse startups have achieved more overall customer success, DATAllegro is second only to Teradata in proven high-end data warehouse scalability," Monash wrote.

James Kobielus, an analyst with Forrester Research, also praised the buy "as a smart one."

DATAllegro has "a strong product, robust technology, skilled engineering team, and world-class hardware partnerships (including EMC, Dell, Cisco, and Bull)," he wrote. It also greatly boosts Microsoft, which was a "relative laggard" in the growing data warehousing appliance market, he said.

Kobielus added that this also "sets the stage for rapid data warehousing vendor consolidation" and driving companies such as "Oracle, SAP and HP, in particular, to make strategic acquisitions" of DATAllegro's competitors, which include Netezza, GreenPlum and Dataupia.

The 5-year-old startup was probably not hurting for cash. It received nearly US$20 million in Series D funding in May, and has taken about US$64 million in venture capital since its founding.