The SQL Database server was updated to SP1 before PowerPivot was installed using the original (pre-SP1) media. This resulted in the installer failing saying that the version of sqlncli.msi (SQL Server 2008 R2 Native Client) on the installer was not correct.
Download Service Pack 1 for SQL Server 2008 R2 if you haven’t already.
Extract the contents of the Service Pack to a folder by running the following command in command prompt.
<Name of Service Pack file>.exe /x:<drive>:\<folder to extract to>
Run the command:
Setup.exe /PCUSource=<path to SP1 folder>
This will slipstream the SP1 files during the installation.
For more information, see: