The Elephant In The Room With Hadoop: It Offers Rich Technology With Slimmer-Than-Expected Margins

With the strong growth over the past 10 to 15 years of #AmazonWebServices, #Microsoft #Azure, #Google and #Yahoo, data center technologies have advanced rapidly from their enterprise roots as IT professionals work to serve the needs of these web services providers. The sheer scale required by just one of these providers dwarfs even the largest Enterprise infrastructures. Notably, as well, with the emergence of Cloud computing, many Enterprises operate hybrid infrastructures, with business units maintaining infrastructures in both their own Private and Public Clouds such as AWS or Azure. Technologies developed to suit the needs of one increasingly are being deployed in the other, especially with the proliferation of #BigData.

Surely the most whimsically named of these technologies is #Hadoop, an #OpenSource software framework used to manage large clusters of servers. It is a collection of technologies developed over ten years ago by engineers at Yahoo, including Sean Suchter and Doug Cutting, the latter of whom named the framework after his son's toy elephant. The framework runs on clusters of servers running the Apache operating system and its development is managed by the Apache Software Foundation. To boot, a cheerful yellow elephant has been adopted as its logo.  Like all Open Source software, the technologies are free to be adopted and developed by third parties within the foundation framework, hence the term "open".  Since no license fee is collected, no revenue is generated for what is essentially a non-profit entity.

Yet software is typically a very profitable business. Once developed, software license sales have a low cost of sales and gross profit margins can be as high as 85%. Operating leverage is very high, moreover, and operating profitability scales rapidly with size. In fact, Oracle reports no Cost of Sales and its non-GAAP operating margin in the February quarter was a robust 32%. That said, Hadoop is Open Source software and licensed by the Foundation through its distributors, who only charge for subscription support and professional services. Other notable examples of Open Source Software are Java and Linux.We will return this below.

https://www.forbes.com/sites/johnsonpierr/2017/05/19/the-elephant-in-the-room-with-hadoop-it-offers-rich-technology-with-slimmer-than-expected-margins/?c=0&s=MarketMoves