With MapR fire sale, Hadoop’s promise has fallen on hard times

If you go back about a decade, Hadoop was hot and getting hotter. It was a platform for processing big data, just as big data was emerging from the domain of a few web-scale companies to one where every company was suddenly concerned about processing huge amounts of data. The future was bright, an open source project with a bunch of startups emerging to fulfill that big data promise in the enterprise.

Three companies in particular emerged out of that early scrum — Cloudera, Hortonworks and MapR — and between them raised more than $1.5 billion. The lion’s share of that went to Cloudera in one massive chunk when Intel Capital invested a whopping $740 million in the company. But times have changed.

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Via TechCrunch, Crunchbase, Infogram

Falling hard

Just yesterday, HPE bought the assets of MapR, a company that had raised $280 million. The deal was pegged at under $50 million, according to multiple reports. That’s not what you call a healthy return on investment.

But it wasn’t much better for Hortonworks. Many were surprised when Hortonworks was the first Hadoop company out of the gate to go public in 2014. It would be a rocky ride for the company, which would eventually merge with former golden boy Cloudera in a deal valued at $5.2 billion.

The merger was widely thought to be an attempt by two companies whose stock had fallen on hard times to increase their chances as a single entity. It hasn’t done much for either company. Cloudera’s market cap peaked at roughly $4 billion in March 2019 — today the company’s market cap sits at just $1.8 billion. It has been a rough time for the entire group. What happened?

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Open source doesn’t always win

Investors love an open source model. You have the raw open source code anyone can download and try for free, then you have the paid part, where companies provide the kinds of tools and services that enterprises require and demand. The approach provides a built-in market as projects gain in popularity. See Kubernetes or Linux or MongoDB.

And if it works well, it also removes some of the development burden on a startup with limited resources. If a project picks up steam as Hadoop once did, it provides a community of people to help build the project, allowing a startup to grow the product without investing in expensive engineering talent.

Companies can and do develop around a successful project, and provide support and tools for simplifying the complexity of the raw open source tool. The trouble for Hadoop from the beginning was that it was so complex, and these companies (and others) perhaps didn’t do enough to simplify it. It still required a fair bit of heavy lifting to make it work.

Can it come back?

As the market fragmented, even a merger the size of the one between Cloudera and Hortonworks hasn’t been able to help it recover. Perhaps, it is simply a case of the market passing Hadoop by and other services and capabilities taking its place. That’s what Doug Henschen, VP and principal analyst at Constellation Research believed right after the merger was announced:

The move to the cloud is, in my view, sapping growth and revenue potential for these companies such that it won’t sustain three profitable players with strong, double-digit growth. Cloudera and Hortonworks have both moved to provide consistent hybrid- and multi-cloud capable services, but I see @AWS EMR and Spark services and similar Azure and Google services as capturing faster growth, and together, the lion’s share of the big data platforms market,” he told TechCrunch last year.

Hadoop had its day, raised its capital and fell to earth, proving that not every open source project is going to produce positive results for investors. This one shows that when any product category with significant capital investment falls, it can fall hard and leaves investors with lots of questions in its wake.

There is a speck of room for optimism, however. Cloudera quietly announced last month that it was changing its open source licensing model to be more in line with Hortonworks, and since the stock has picked up a smidgen. Whether that move can lift the flagging company further out of the doldrums remains to be seen.