A reporter wrote in to ask whether investor interest in “Big Data” was justified or hype. (More precisely, that’s how I reinterpreted his questions. ) His examples were Splunk’s IPO, Teradata’s stock price increase, and Birst’s financing. In a nutshell:
- My comments, lightly edited, are in plain text below.
- Further thoughts are in italics.
- Of course I also linked him to my post “Big Data” has jumped the shark.
- Overall, my responses boil down to “Of course there’s some hype.”
1. A great example of hype is that anybody is calling Birst a “Big Data” or “Big Data analytics” company. If anything, Birst is a “little data” analytics company that claims, as a differentiating feature, that it can handle ordinary-sized data sets as well.
When I checked Birst’s website, “Big Data” was nowhere to be found. On the other hand, the term was all over its press pitch for the financing.
2. The great growth in database sizes is both caused and balanced out by Moore’s Law. The net effect is healthy but not enormous growth in the overall data management and analytics markets.
I’ve made versions of that point many times before.
3. Incumbent data and analytic technology vendors such as Oracle, IBM, and Microsoft are vulnerable, but are competing very hard. Favorable exits have ensued for companies such Netezza, DATAllegro, Vertica, and Aster Data.
The connection between those two points is that the big companies will hold a lot of share, but part of how they’ll hold it is through acquisitions. For example, IBM, Microsoft, HP, Teradata, and Greenplum all bought newish analytic RDBMS vendors, at an aggregate cost of several billion dollars. And SAP bought Sybase.
But while there have been billions of dollars in fairly recent analytics-related acquisitions, the pace of acquisition would have to accelerate much further yet to justify current valuations.
Upon reflection, I may have overestimated the acquisition/IPO total-value-created ratio somewhat. Even so, what’s the last enterprise technology vendor to create huge investor value by going public, continuing to prosper, and so on? Red Hat and Autonomy may be as good as it gets. VMware isn’t really an example, because of its ownership structure.
4. I’m worried that people may be overestimating the business benefit of accurate analytics, great though that value truly is. For example, it’s not plausible that all enterprises in the world use better analytics to all improve their respective market shares.
Yes, it’s great to be an arms dealer to all sides. But “Big Data” technology is just another chapter in the ever-growing importance of IT.