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Cloudera open source route seeks to keep big data alive

Inspired by the IBM-Red Hat model, Cloudera goes the open source route to broaden its market as demand for Hadoop weakens and the vendor takes on big competitors like AWS.

Cloudera has had a busy 2019. The vendor started off the year by merging with its primary rival Hortonworks to create a new Hadoop big data juggernaut. However, in the ensuing months, the newly merged company has faced challenges as revenue has come under pressure and the Hadoop market overall has shown signs of weakness.

Against that backdrop, Cloudera said July 10 that it would be changing its licensing model, taking a fully open source approach. The Cloudera open source route is a new strategy for the vendor. In the past, Cloudera had supported and contributed to open source projects as part of the larger Hadoop ecosystem but had kept its high-end product portfolio under commercial licenses.

The new open source approach is an attempt to emulate the success that enterprise Linux vendor Red Hat has achieved with its open source model. Red Hat was acquired by IBM for $34 billion in a deal that closed in July. In the Red Hat model, the code is all free and organizations pay a subscription fee for support services.

New subscription model

Under the new model the plan is that starting in September 2019, Cloudera will require users to buy a subscription agreement to access binaries and the Cloudera-hosted source they are built from, for all new versions and maintenance releases of supported products. Not all of the vendor's products are open source today, but they all will be by February of 2020, if everything goes according to the Cloudera open source plan.

Over the past several weeks, Cloudera has briefed customers, partners and analysts on the new licensing model and the feedback thus far has been largely positive, said David Moxey, VP of product marketing at Cloudera.

"We believe that reflects market understanding and acceptance of the Red Hat model which we have chosen to emulate," Moxey said. "Influential analysts have been positive and have helped clients and colleagues accurately understand the change and rationale."

Open source path a departure

The shift to a completely open source model is a departure from earlier comments the company made about maintaining both open source and some proprietary tooling, said James Curtis, analyst at 451 Research. Overall, Curtis said he sees the Cloudera open source move settling a number of things for the vendor.

 "Trying to drive both a hybrid and OS [open source] strategy would have had its challenges," Curtis said. "Now the company can move forward and concentrate on its products and services."

It makes sense to maintain that strategy not only from the standpoint of keeping faith with former Hortonworks customers, but also to trade on the momentum that open source software is seeing in the enterprise.
Doug Henschen Analyst, Constellation Research

Doug Henschen, an analyst at Constellation Research, said he wasn't entirely surprised by Cloudera's all open source commitment as it's consistent with Hortonworks' strategy before the merger with Cloudera.

"It makes sense to maintain that strategy not only from the standpoint of keeping faith with former Hortonworks customers, but also to trade on the momentum that open source software is seeing in the enterprise," Henschen said.

Also, now that it's apparent that cloud services -- in particular AWS EMR (originally Amazon Elastic MapReduce) -- are cutting into Cloudera's business, it makes sense to back the hybrid- and multi-cloud messaging and differentiation from cloud services with a purely open source approach, Henschen added. Looking forward, Henschen said he sees Cloudera continuing to emphasize its hybrid- and multi-cloud story by continuing to develop and deliver its Cloudera Data Platform.

"Cloud services are clearly winning in the market because they offer both elasticity and minimal administration, two traits that save customers money," Henschen said. "What wouldn't be surprising is seeing new Altus services options, perhaps including pared down, lower-cost options featuring Spark, object storage and fewer, if any, Hadoop components."

Hadoop's prospects uncertain

At the core of Cloudera's business is Hadoop, a technology and a market that is arguably in retreat as organizations choose different options for handling large data sets and big data.

While the financial fortunes of Cloudera and other Hadoop vendors, notably MapR, have been under pressure, Curtis noted that there is still demand for Hadoop and related distributed data processing frameworks. The market is shifting and settling, however.

Cloudera Palo Alto headquarters, Workload XM
Cloudera Palo Alto headquarters (on screen is the Workload XM)

"What is happening is that where enterprises are doing their analytics is changing and specifically to the cloud," he said. "Cloudera was late to fully adopt the cloud, but it wasn't completely behind either."

Curtis added that while the Cloudera open source route still leaves the vendor with catchup to do, he doesn't expect Hadoop to go away completely as there is still a demand for that type of processing capability.

But big data market is vibrant

As for Henschen, he said he doesn't think of it as 'the Hadoop market' so much as 'the big data market,' and that's not going away.

"Companies are continuing to harness big data to understand their businesses and to spot new opportunities," he said. "What is clear is that companies are moving away from complexity, if they can avoid it."

The demand to reduce complexity has forced changes in Hadoop software and vendors associated with Hadoop. For example, Henschen noted that Cloudera embraced Apache Spark as early as 2017, with Cloudera executives making the point that they were behind more Spark software deployments than any other vendor. Indeed, as part of the company's recent open source announcements, Henschen said that Cloudera executives emphasized that Cloudera plans to invest in Spark, Kubernetes and Kafka.

Henschen emphasized that it's important to note that AWS, Microsoft, Google and other cloud vendors still offer Hadoop services because that software addresses certain big data needs well.

Also, there are thousands of on-premises Hadoop deployments that aren't disappearing right away, Henschen pointed out.

The installed base of deployments is a legacy that the vendor can build on as the Cloudera open source strategy unfolds, he said. But the big question, according to Henschen, is whether the vendor can succeed in offering the right mix of software and services that will address today's big data needs, appeal to customers and drive growth.

"Hadoop helped usher in the big data era, but today there are more choices and combinations of software and services that companies can use to address their big data needs," he said.

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