Cloudera IPO, Not Trying to Rain on the Parade

Cloudera, a data management platform for Big Data recently announced its IPO. What they do, exactly, is a bit complicated for the average investor. Actually, it is even a bit complicated for the technically savvy IT professional. Here is our take at G2, just so you can glean a few insights about Cloudera, and the space where they play. The technology is only one part of the discussion, the down round IPO pricing is the other part.

Here are the techie bits and bytes

Cloudera offers a unified Platform for Big Data: The Enterprise Data Hub. Cloudera is a provider and supporter of Apache Hadoop for the enterprise. Hadoop is an open-source software framework used for distributed storage and processing of big data sets using the MapReduce: Simplified Data Processing on Large Clusters or a Grid. Hadoop originated from the Google File System: a scalable distributed file system for large distributed data-intensive applications. Hadoop provides fault tolerance while running on inexpensive commodity hardware. Cloudera was among the early arrivals in offering a commercial packaging and overlay on top of the open source Hadoop distribution. 

Big data processing and distribution systems offer a way to collect, distribute, store, and manage massive, unstructured data sets in real time. These solutions provide a simple way to process and distribute data amongst parallel computing clusters in an organized fashion. Big data processing and distribution systems provide a level of simplicity to the common business problem of data collection at a massive scale and are most often used by companies that need to organize an exorbitant amount of data. Products within this category, such as Cloudera, offer a distribution that runs on top of the open-source big data clustering tool Hadoop. Translation, Hadoop takes really big data problem and shares the load across lots and lots of servers.

The Cloudera IP is based upon Open Source, does that matter?

As great as open source projects can be, they often lack the fit and finish required to survive (aka be usable) in more structured enterprise environments. While Hadoop has evolved into a stable, scalable, flexible core for data management, it is still at its core, an open source project. Among the most important elements in providing customers with an open source distribution is providing added value above the raw distribution itself; usability and maintenance. Basing a technology and your business on open source technology is a solid idea, when done right.

Regarding their potential worth on the public markets, whether you should buy-in, invest, ling-term or short term; we have little to say there! We help business professionals to solve business problems with software and service selection. So, we will stick to what we know, based upon the data we have. Hadoop is an excellent technology to solve the big data problems that will still be getting bigger and Cloudera does put the fit and finish on top of Hadoop, making it usable and reducing some of the business risk.

Open Source is not The Issue, but there are Issues

In 2014, Intel invested $766M at a hair under $31/share. The preliminary IPO price is between $12 and $14 / share. In essence, this is a down round in the public IPO. Is that bad, maybe? Companies go public to raise money, an IPO is a fundraising event. There might be a disconnect between pre-IPO VC investors and the view that the public markets will take. The problem might be that any company that needs capital has fewer people to convince in VC land- smart people, but a series of meetings and due diligence with a limited set of people, not the scrutiny of public opinion. The benefit to public investors with a down round IPO is the price would appear very attractive, even discounted.

Intel has plenty of money in the bank, so I am not too worried about their cash position. The markets will tell the rest of the story and I am not inclined to make any statements about buying, or taking a wait and see attitude.