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Cloudera+Hortonworks Merger

This is interesting news today. Cloudera and Hortonworks have been symbolic of the “big data” era as two of the most successful companies built around the Hadoop open-source project, but apparently, this market isn’t big enough for the both of them. Neither company has made a profit after years of existence. Hortonworks went public in 2014 and Cloudera soon followed. Mike Olson, founder of Cloudera said years ago that it is almost impossible to create a profitable company in the open source product space. The only exception is Red Hat that pushed Linux with support and services. Other open-source product companies like MongoDB have the same issue – how to make money?

Both companies jointly announced today that they will have an all-stock merger of equals. The transaction will create the world’s leading next-generation data platform provider, spanning multi-cloud, on-premises, and the Edge. The combination establishes the industry standard for hybrid cloud data management, accelerating customer adoption, community development, and partner engagement. The total value of the two companies is around $5.2 billion (based on share prices as of today). The deal was described as a “merger of equals.” However, according to the agreement, Cloudera’s stockholders will own a 60% stake in the new company. Cloudera CEO Tom Reilly is set to become chief executive of the new, combined company, while Hortonworks’ CEO, Rob Bearden, will be out of an operating role, but will take a board seat.

When Cloudera started, it was the first to offer Hadoop support for on-premise computing. In recent years, competition has mounted in this space, as Amazon, Microsoft, Google, Oracle, and others heavily invest in and market their own competing solutions. The combined company will have $720 million in yearly revenue and 2,500 customers, although neither company has recorded a profit to date, which was likely the impetus for the merger.

The promise of the joint company is to offer AWS and Azure cloud-native users the experience from their on-premise install base, which probably makes sense. That’s important because AWS and the other cloud companies offer managed Hadoop services that compete with both Cloudera and Hortonworks. The existing customer base of the two companies is behind the curve when it comes to adopting cloud computing, and the hope is that potential customer base will be attractive to the cloud vendors.

The challenge will be how they bring their competing platforms and solution offerings to a synergistic whole, which will keep their engineers busy for some time.

So it looks like the vendor consolidation in the big data space has started as a matter of survival.

from: Jnan Dash’s Weblog
via Jnan Dash

Source: Cloudera+Hortonworks Merger Via Business Advice.

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