Despite a crescendo of hype, profits in the real world with relating to Big Data are far from guaranteed. So an obvious question comes to the mind, ‘Is the Big Data Gold Rush producing only paltry bronze?’ For all its hype as technology’s next big Gold Rush, only a few Big Data vendors seem to be making money.
Where’s the Big Money in Big Data?
Over the years, we have seen many companies raising several hundreds of millions of dollars in order to make a few hundreds of millions of dollars. However, none of the biggest vendors of Spark, Hadoop, and other big data essentials is anywhere near achieving profitability. For the most part, these companies are actually getting farther from it. Actually, this isn’t how a Gold Rush is supposed to work.
Who is actually making big money in big data?
Take a walk through the income statements of various big data vendors and it can be assumed that they are swimming in red ink:
● Cloudera: $261M in revenue, $187M in losses
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
● Hortonworks: $184M in revenue, $251M in losses
● Alteryx: $85M in revenue, $24M in losses
● Splunk: $950M in revenue, $355M in losses
● Tableau: $827M in revenue, $144M in losses
These losses are continuously mounting year on year.
Wall Street analyst Peter Goldmacher’s research note
To be clear, vendors were never likely to be the big winners in big data, anyway. Peter Goldmacher, Wall Street analyst hammered this point home 5 years ago on Cloudera’s own blog: the ‘biggest winners in the Big Data world aren’t the Big Data technology vendors, but rather the companies that will leverage Big Data technology to create entirely new businesses or disrupt legacy businesses’.
A year later Mr. Peter followed this up with a longer research note, arguing:
‘We believe Hadoop is a big opportunity and we can envision a small number of billion dollar companies based on Hadoop. We think the bigger opportunity is Apps and Analytics companies selling products that abstract the complexity of working with Hadoop from end users and sell solutions into a much larger end market of business users. The biggest opportunity in our mind, by far, is the Big Data Practitioners that create entirely new business opportunities based on data where $1M spent on Hadoop is the backbone of a $1B business’.
Tech companies making significant money from big data
There are companies who are making significant money from big data. But, these companies tend to look like tech companies, and not the mainstream retailers, media companies, etc. In fact, Facebook uses data to wreak havoc on media giants, and Google is dismantling the advertising behemoths.
Image Source: Image
Date: June 28, 2017