Splunk Leads Tiny Big Data Market - InformationWeek

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Data Management // Big Data Analytics
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3/3/2015
09:06 AM
Doug Henschen
Doug Henschen
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Splunk Leads Tiny Big Data Market

Splunk marks another big year, taking in more revenue than the top three Hadoop distributors combined. That's why startups want to follow in its footsteps.

What big data vendor hauls in more revenue than Cloudera, Hortonworks, and MapR combined? It's Splunk, which last week reported yet another year of fast growth, reaching $450.9 million in revenue in its fiscal 2015 year ended January 31, a 49% increase over prior-year results.

Despite recent talk about the big data market being dominated by open-source technologies, Splunk has managed to grow aggressively with purely commercial technology. Its Splunk Enterprise software, which includes a proprietary big-data repository and analysis software, has long been popular with IT types. The company now claims more than 9,000 customers among enterprises, government agencies, universities, and service providers.

[ Want more on this topic? Read Big Data Tempest In A Teapot. ]

Designed first and foremost for log files and other machine data, Splunk's software is used for IT system optimization, risk analysis, fraud and threat detection, and, to a lesser extent, business-trend analysis. The 12-year-old company has been at the big data game far longer than Hadoop vendors Cloudera (founded in 2008), MapR (founded in 2009), or Hortonworks (spun out of Yahoo in 2011). That's one reason it's far larger. Privately held Cloudera and MapR are pegged at somewhere above $100 million and somewhere below $50 million in annual revenue, respectively. Hortonworks, which raised $100 million in an IPO in December 2014, recently reported $46 million in revenue for fiscal year 2014.

Following its monster, $229 million IPO -- one of the most successful in 2012 -- Splunk introduced Splunk Cloud, Splunk Hunk software that works in conjunction with Hadoop, and Splunk Mint software aimed at mobile developers. Splunk has also extended its software to work with NoSQL databases, including Cassandra, MongoDB, and Neo4j. And to make its software more accessible, Splunk has introduced apps for AWS, Salesforce, and mobile security.

All these efforts to make big data analysis easy and accessible have helped fuel growth. But, like many big data companies, Splunk is not yet profitable. Splunk reported an operating loss of $57.1 million on revenue of $147 million in its most-recent quarter. For fiscal year 2016 Splunk is forecasting a 2% to 3% operating margin on projected annual revenue of $600 million. While most big data vendors are still scratching for their first $100 million in revenue, Splunk is a dollar among dimes in the big data market.

Instead of presenting IT with a menagerie of unfamiliar open source projects, Splunk has bent over backwards to offer apps for familiar tools and platforms.

Instead of presenting IT with a menagerie of unfamiliar open source projects, Splunk has bent over backwards to offer apps for familiar tools and platforms.

The company is also an outlier in other respects. In fact, "it shouldn't exist," wrote market watcher Matt Asay in a widely read column last year. "Open source owns Big Data, from Hadoop to NoSQL databases," Asay wrote. "How is it that a proprietary, expensive licensed software business can thrive?"

The answer lies in the fact that Splunk's software "just works … with minimal fuss," he wrote. Splunk's SPL (Search Processing Language) for data exploration is relatively simple for IT types, supporting searching, filtering, modification, and manipulation. Splunk also offers drag-and-drop data visualizations and filters for nontechnical business users.

Given its aptitude for analyzing machine data, Splunk is in a sweet spot for Internet-of-Things-style applications. Rumor has it the vendor is gearing up for another new-product announcement, so perhaps IoT will be the latest spin keeping Splunk on the tip of IT tongues?

It hasn't hurt Splunk's brand recognition that various big data startups are calling themselves "the next Splunk." From Sumo Logic to Logentries to (open source) Graylog, they're all gunning to become the next kingpin of big data, but their role model is Splunk, not Cloudera or MongoDB.

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio
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Charlie Babcock
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Charlie Babcock,
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3/3/2015 | 10:40:26 PM
Splunk is an exception but there may be a productivity rule
Most new software companies are getting established by following the open source model. Docker is a good example. But Splunk is a viable exception. Making server log data decipherable was a huge step and they were there as IT became interested in using it. Also, I suspect that once Splunk software gets established, its productivity keeps going up at a rate that rivals can't match. That's a key to remaining in a place as a non-open source company. The software works, is hard to replace and it keeps getting more productive at the same price.
D. Henschen
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D. Henschen,
User Rank: Author
3/3/2015 | 11:49:18 AM
Re: Other Splunk competitors
Yeah, there are a lot of vendors going after this space that I didn't mention. Loggly is another one. And when considering big data, I guess we should also consider Oracle, IBM, Microsoft, and HP. They have been all over the data and IT systems monitoring markets for years... and they all make big data pureplays look like tiny companies by comparison.

You're right about open source vendors being inherently small. Linux "giant" RedHat has only $1.5 billion in revenue after all these years. Makes me wonder if all three Hadoop vendors can crack $1 billion -- individually or even combined -- any time soon.
Michaelrj
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Michaelrj,
User Rank: Apprentice
3/3/2015 | 11:37:16 AM
Other Splunk competitors
Your article didn't mention VMWare vRealize Log Insight, IBM's Smartcloud Analytics Log Insight and Microsofts's new Azure OPerational Insights. Those are commercial products in competition with Splunk. Do you think they have negligible revenue? The article mentions Graylog, but does not mention the Elasticsearch ELK stack, which apparently has had millions of downloads. Of course the open source companies such as Cloudera and Elasticsearch will have lower revenues than Splunk as their software is free. They only sell associated services. My feeling is that Splunk is only growing sales because it has a huge sales force motivated by free stock and that Splunk doesn't mind running a huge loss (effectively giving the product away well below cost.) Soon the sales will dwindle. Salesmen will cash their RSUs and move on.
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