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Hortonworks—the big-data startup spun off from Yahoo—has filed for an initial public offering.
The Silicon Valley startup sells support and services for its own version of the open source data-crunching software Hadoop, a mainstay among modern web companies. Its Wall Street debut is a milestone for much larger effort to create a market for new data center technologies developed at web giants like Google and Facebook—technologies designed to solve unusually large problems involving online data.
Yahoo funded the early development of Hadoop, which was initially based on technologies Google built to help run its search engine, and it quickly found a home outside of Yahoo, at companies like Facebook, eBay. and Twitter, spawning a whole ecosystem of new tools for storing and analyzing large amounts of online data. Along the way, Hortonworks spun-out of Yahoo, bringing much of the company’s original Hadoop team with it.
Hortonworks is part of the first generation of open source companies aiming to bring Google-type know-how to the larger market, and now, many other startups are nipping at its heels. A new company called Databricks is bringing the next generation data processing platform Spark to wider audiences, for instance, while Continuuity offers an online service that mimics Facebook’s internal data management platform.
Investors have been bullish on big data startups, and Hadoop-related companies have received much of their attention. Hortonworks has raised $248 million in venture capital to date, and its biggest competitor, Cloudera, which was co-founded by Hadoop co-creator Doug Cutting, has raised $1.2 billion. Other competitors include MapR, co-founded by former Google infrastructure lead M.C. Srivas, and the EMC spin-off Pivotal.
Hortonworks has tried to set itself apart by staying as true to its open source roots as possible. While other Hadoop companies have focused on building proprietary Hadoop management tools to add value to the open source project, the startup has focused more on offering services. Although the company’s enterprise version has a few features reserved only for paying customers, the vast majority of its features are open source.
Hortonworks is the first of its peers to offer an IPO, but the competition will continue. “I don’t think that this IPO means that Hortonworks has won,” says Forrester analyst Mike Gualtieri. In fact, Hortonworks has a long way to go before it’s even a profitable company. As pointed out by Recode, Hortonworks has reported a $86.7 million loss on $33.3 million in revenue so far this year.
Gualtieri estimates that the other Hadoop companies are probably making around the same amount. Many companies are testing Hadoop, but they’re still using free versions of the software and won’t have to start paying vendors until the projects move out of the experimental phase and into real commercial use. And though there are many players in the market, along with many new big data tools, he expects there to be huge demand for Hadoop services in coming years. “For what it does,” he says, “Hadoop is still the only game in town.”
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