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Intel exits a data analysis business and invests in another one

For a company getting out of the data analysis business, Intel is spending a lot of money on a data analysis business.

For a company getting out of the data analysis business, Intel is spending a lot of money on a data analysis business. Last week, Intel said it was making a ?significant? equity investment in Cloudera, which produces the most popular version of the Hadoop software framework for big data analysis. Intel, the world?s largest maker of semiconductors, is also turning over to Cloudera its own version of Hadoop, which it said was among the most popular globally, and would seek to move its customers over to Cloudera.

Intel would not say how much it was investing, but said it would be the largest shareholder in Cloudera. Individuals with knowledge of the deal, who spoke on the condition of anonymity, characterised it as well over $100 million. Cloudera is widely expected to go public later this year, at a valuation for the big data software company in excess of $3 billion.

The move will make Cloudera the largest purveyor of Hadoop by far, and will give it a significant overseas presence. Intel will presumably share in whatever success Cloudera has down the road, and will work with the company to make sure Cloudera products are optimised to run on Intel hardware. That means it will sell more semiconductors as Cloudera sells more Hadoop.

?When you?ve already got 94% of the computer server market, you have to grow the market,? said Jason Waxman, general manager of Intel?s cloud infrastructure group. ?We want to be in smart signs, wearable devices, cars?50 billion things in a few years. You need a platform to ingest the data and work with it.? That Hadoop platform runs on a server.

The market for Hadoop, which has several contenders, ?needs a clear de facto winner,? Waxman said. Intel was doing better on chips than software anyway, he added, saying ?make no mistake, for every $1 of software licenses, it drove $4 of silicon purchases.?

?The market doesn?t want endless choices, it wants alignment among key players,? said Tom Reilly, chief executive of Cloudera. ?This fits our strategy of developing an ecosystem of partners.?

Since taking over last year as Intel?s chief executive, Brian Krzanich has moved Intel out of several businesses to refocus the company, the world?s largest maker of chips, on its core business. Having missed out on much of the smartphone and tablet computing business, he has stressed getting Intel products into the next big phase of computing, the so-called Internet of Things.

For Cloudera, the move means lots of exposure in places like India and China, a big endorsement from a company with thousands of partners in the computer business, and some useful new technology, like Intel?s file system for large computing jobs.

Cloudera has been on something of a tear since Reilly became chief executive last July. Besides the Intel news, earlier this month it announced a $160 million round of funding from several institutions, including the investment arm of Michael Dell, that was said to value Cloudera at nearly $2 billion.

In December, Cloudera made its Hadoop system available on Amazon Web Services (a move unlikely to sell many more chips, since Amazon has plenty of servers.)

In a recent interview in The Wall Street Journal Reilly said he thought Cloudera could have revenue of $20 billion or more.

Quentin Hardy

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First published on: 31-03-2014 at 02:50 IST
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