Microsoft's Hadoop, Big Data Bets: Should You Follow Them?

Where is Microsoft heading with Big Data? The answer often involves a Hadoop platform from Hortonworks as well as a relationship with Cloudera -- among other players. For I.T. entrepreneurs marching into the Big Data market, Microsoft's moves are worth watching. Here's why.

The latest news hook: Hortonworks hopes to raise $100 million in a potential Initial Public Offering. During its first nine months of 2014, Hortonworks' revenues were $33.4 million, up from $15.9 million for the first nine months of 2013. But losses also mounted -- reaching $86.7 million for the first nine months of 2014.

Microsoft Opens Its Wallet

Now here's the twist involving Microsoft: Roughly 22 percent of Hortonworks' revenues come from Microsoft. That's about $7.35 million of Hortonworks' revenues for the first nine months of 2014. Annualized, the figure is about $9.8 million.

So why is Microsoft spending about $10 million annually with a start-up Big Data vendor? The answer is rather simple: Similar to how Linux emerged as an open source standard in the late 1990s, a lot of pundits think Hadoop will emerge as a Big Data standard. In fact, Forrester Research says Hadoop will be the "must have" data platform for 2015. 

Built on an open source software model, Hadoop allows businesses to manage Big Data applications across clusters of commodity hardware.

The seeds for Hadoop were originally planted at Yahoo, but numerous trees now stand in the Hadoop forest. In addition to Hortonworks, key rivals include Cloudera and MapR. Plus, most of the major IT vendors -- from Oracle to IBM -- also have Hadoop strategies in place.

Microsoft Milestones

And then there's Microsoft -- where Hadoop is taking hold internally and on the Azure public cloud. Customers building Hadoop applications on Azure include numerous universities and medical research centers. Take a closer look, and you'll see Azure has a Hadoop service called HDInsight -- along with an ecosystem of Big Data tools and partners.

Microsoft's work with Hortonworks dates back to October 2011. At the time, Microsoft and Hortonworks announced Hadoop on Azure and Window Server strategies. Much of that work is now in place, and the current Microsoft-Hortonworks financial deal is stated to expire in July 2015, according to GigaOm. At the same time, Microsoft has also been working with Cloudera -- including support in Azure.

Bottom line: It's no longer early in the Big Data and Hadoop game. We're probably heading into the middle innings now. I.T. entrepreneurs may need to shake up their strategies to stay in the game...

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