Start-Ups

What the Hortonworks IPO could mean for the future of big data

Enterprise Hadoop vendor Hortonworks recently filed for an initial public offering. It could change the game in the coming months for big data and Hadoop.

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Image: iStockphoto/Andrea Road

There's no doubt that the Apache Hadoop open source framework is one of the foundational elements of the recent rise of big data. Hadoop, which allows users to store and process large data sets, is the cornerstone of many big data software stacks.

Companies such as Hortonworks, Cloudera, and MapR are leading the charge in providing commercial distributions of Hadoop. While they were all started at different times, all of these companies have remained private until now.

On Monday, November 10, California-based Hortonworks filed a Form S-1 with the U.S. Securities and Exchange Commission in preparation for an initial public offering of common stock. Put simply, Hortonworks is going public.

The impending IPO of big player like Hortonworks has potentially huge implications for Hadoop and for big data as a greater trend. It's important to examine some of the likely ramifications of this deal.

When considering big data and Hadoop's critical role in many big data deployments, it's essential to note that while Hadoop and big data are definitely not synonymous, they are affected by each another.

Mike Gualtieri, an analyst at Forrester, believes there is a legitimate market for Hadoop vendors and an IPO from Hortonworks was expected. He also noted that competitor MapR said it would be considering a play at an IPO sometime next year.

"Forrester believes Hadoop is a must-have for large enterprises because of what Forrester calls "Hadooponomics" — its ability to linearly scale both data storage and data processing at a dramatically reduced cost compared to other platforms," Gualtieri said.

If there is a real demand for big data and Hadoop, an IPO by Hortonworks could help further legitimize the big data space and grab the attention of apprehensive corporate IT decision-makers who have avoided big data so far.

Jim Frankola, the CFO of Cloudera, sees the Hortonworks IPO filing as a positive sign for the Hadoop space.

"I view the IPO of Hortonworks as one of many factors that signal what's going to be the enormous opportunity for Hadoop and, in essence, it validates the next generation of data management technologies," Frankola said.

Hortonworks is also known for building up an ecosystem around its products. Being the first among its peers to IPO could bring more attention to the company and its family of products.

However, being the first to the public market won't mean much for Hortonworks if it can't prove the value of Hadoop and big data.

"Value proposition is clearly the No. 1 challenge that organizations tell us about. They're not sure where these things really add value, or if they add value," said Gartner analyst Nick Heudecker.

Another challenge for enterprises considering Hadoop is the set of skills needed to make use of the platform. According to Heudecker, some companies aren't sure what skills they need, or where to find them.

It's important to remember that Hortonworks still isn't a profitable company. In fact, its losses are growing. Its revenues are steadily growing as well, but they still aren't on par with the amount of money the company is losing. According to Heudecker, the revenues are a sign that the enterprise isn't all-in on Hadoop.

"They're experimenting, they're looking for opportunities, they're trying to see where it fits," Heudecker said. "It remains to be seen if it will become this incredibly disruptive technology rather than simply a complement to what is already available today."

However, as the big data story plays out, it's clear that the competition over big data is heating up. In addition to competing with Cloudera and MapR, incumbent analytics giants like SAP, Oracle, and IBM pose a threat as well. The increased competition could have been one of the factors that led to Hortonworks decision to IPO.

As Gualtieri mentioned, the IPO from Hortonworks wasn't a complete surprise to the industry. Although Heudecker isn't sold on the future of big data just yet, he said that Hortonworks won't be the only IPO we see in this space.

In addition to more IPOs, Gualtieri said that we could see an increase in mergers and acquisitions (M&A) activity in the space.

"Hortonworks going public could trigger another one of the Hadoop vendors to be bought buy a larger enterprise software company," Gualtieri said. "Hadoop is a fundamental data platform. IBM has their own Hadoop distro, but I bet Oracle, Microsoft, SAP, HP, EMC, Dell, and others wish they owned a distro too."

What do you think?

We want to know. Is Hadoop the next big thing in the enterprise? Should IT leaders bet on big data? Let us know in the comments below.

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About Conner Forrest

Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.

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