Investments in Big Data: Funding increases to Hadoop providers
Recently, there has been a lot of news around venture capital firms pouring large amounts of money into Big Data companies. The most recent Big Data investment news came from Cloudera which raised $900 million in financing including $160 million from a collection of venture capital firms and $740 million from Intel, bringing their total funding to more than $1 billion.
Within the same week, Hortonworks raised $100 million in new funding and Platfora, an analytics startup, closed a $38 million round of investments.
This financial push raises the natural question: how much the uptick in funding will impact the overall industry?
Recently I sat down with Syncsort’s President, Josh Rogers, who weighed in on the topic.
M.K. What do you believe is the significance of Intel investing in Cloudera?
J.R.: There are a few levels of significance. This is a large capital raise, especially for a company of Cloudera’s size. They just raised more than 10x their revenue (according to Wikibon’s most recent estimates). Clearly Intel sees Hadoop as a major driver of compute going forward and just as importantly, Cloudera believes the market opportunity is of a scale where they can deliver a return on a $1 billion capital raise. The scope of the deal and the profile of the investors is a strong indication that there is a wide held belief that Hadoop will be the cornerstone of innovation for the next generation of data management and analytics. The Cloudera and Hortonworks announcements also show that both companies are not trying to be acquired. They are looking to build world class companies that will lead the industry in this next generation of data management platforms.
M.K. How will this impact the Big Data industry? Is this an inflection point?
J.R.: Yes, it is an inflection point. This legitimizes the enterprise adoption of Hadoop. The funding speaks to the amount of progress Hadoop has made at penetrating the enterprise infrastructure stack and the pace at which it is addressing the platforms traditional shortcomings in manageability. The question has moved from whether Hadoop is relevant in the enterprise to how much analytic workloads will be powered by Hadoop in the years to come.
M.K. Will other distributors react?
J.R.: Of course they will. However, the impact of these investments extends far beyond the core Hadoop platform and the associated offerings from the distributions. It impacts the market dynamics for a wide range of data management segments including MPP databases, data integration tools, business intelligence providers, search engines and even security solutions. For vendors in each of these segments they must confront the reality that the core architecture of data management systems will become more and more Hadoop-centric which heightens their need to evolve their core architectures. Most of these offerings represent application specific functionality implemented on top of a relational data store. The underlying platform is changing and to provide best in class capabilities vendors across these segments will need to shift their core architectures which is no small task.
J.R.: It will give a lot more confidence to decision makers who will not need to wrestle with the question of whether Hadoop will be around or not in the years to come, it is here to stay. It will be very challenging for some of the data management market leaders who rely on renewal revenue streams from products that are extremely expensive when compared to a Hadoop based infrastructure.
M.K. Although financial backing lends credibility to Big Data, do you see any down sides?
J.R.: Cloudera and Hortonworks now each have large war chests to deploy against continuing to innovate and progress the core platform. While they will undoubtedly compete aggressively, they will also need to help shepherd the open source community to deliver a single platform that can be widely adopted. While there will be debate on specific items, it will be critical that these organizations continue to focus on delivering a single platform where the open source community, their customers and their partners can confidently invest and innovate.