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March 27, 2014

Intel Exits Hadoop Market, Throws In with Cloudera

Alex Woodie

Intel today announced it will cease development of its own Hadoop distribution and instead will invest in and promote Cloudera’s distribution to its customers. The surprise move confirms a rumor that surfaced last week that had Intel taking a significant stake in Cloudera during its latest round of venture funding.

The move gives a significant boost to Cloudera and helps strengthen the Palo Alto, California company’s grip on the market. Cloudera is the oldest and biggest Hadoop distributor. It has about 1,000 customers and its revenues, which analyst group Wikibon pegged at $73 million last year, are growing rapidly.

Cloudera has big plans for Hadoop as the “enterprise data hub” of the future, and was positioning itself to compete not against the smaller Hadoop pureplays like itself—the Hortonworks and MapR Technologies of the world–but against the bigger megavendors like Intel, IBM, and EMC/Pivotal. Now that Intel has given up on Hadoop and thrown its weight behind Cloudera, the company has one less megavendor to worry about.

Intel will become the single largest stakeholder in Cloudera as a result of the technology and business partnership that the companies unveiled today, both companies said. Neither company would disclose the exact amount of the investment. However, it’s likely in the neighborhood of $40 million, considering that Bloomberg–the news outfit that originally reported the Intel rumor–had sources that claimed Cloudera’s latest round of financing exceeded $200 million, and Cloudera itself announced the round totaled $160 million. Considering Bloomberg turned out to be right, then the difference is likely Intel’s share of the investment. In total, Cloudera has received $300 million in venture financing, and values itself at about $2 billion, although that number may need to be revised in light of today’s news.

The deal has Intel migrating its Hadoop customers and technology into Cloudera. The technology guts of Intel’s Distribution for Apache Hadoop/Intel Data Platform (IDH/IDP) will be integrated into Cloudera’s Distribution for Hadoop (CDH). The migration will begin after IDH/IDP version 3.1 is released at the end of March, which we assume will be the last release from Intel. The companies say they will provide a migration path that provides “a seamless customer transition to CDH.” Ostensibly, that task shouldn’t be difficult, considering both products are based on open source Apache technology.

Diane Bryant, senior vice president and general manager of Intel’s Data Center Group, said the partnership encompasses Intel data center initiatives, including network, security, and storage, and the Internet of Things. “By aligning the Cloudera and Intel roadmaps, we are creating the platform of choice for big data analytics,” she stated in a press release. “We expect to accelerate industry adoption of the Hadoop data platform and enable companies to mine their data for insights that inform the business.”

The market consolidation for Hadoop was expected to start at some point, but few industry experts and analysts had it starting so soon. This is obviously a feather in the cap for Cloudera, which will benefit from the R&D that Intel put into optimizing the interaction between Hadoop and the Xeon chip. Intel promised to contribute all benefits back into the Apache Hadoop open source project, so perhaps these developments lifted all boats in Hadoop’s harbor.

In any event, the alignment with Intel definitely gives Cloudera more clout in the enterprise ecosystem, and perhaps will help the company counter the roster of IT ecosystem partners that have been quietly assembled by its Hadoop rival Hortonworks, which includes enterprise megavendors like Microsoft, SAP, and HP. (Oracle is also aligned with Cloudera, by the way.) Hortonworks this week announced a $100 million venture round of its own, to go along with a $1 billion valuation. It’s unclear what legal exposure this deal brings to Cloudera. Intel and Zettaset have been in a legal tiff over patented encryption routines that Zettaset says Intel appropriated. We’ll undoubtedly find out more as the days go along.

Related Items:

Cloudera Valuation Tops $2B After Latest Funding Round

Hortonworks Snags $100M, Says It’s Worth $1B

Intel Hitches Xeon to Hadoop Wagon