Snowflake, Yugabyte Lead Data Analytics Surge

Recent news related to cloud-based data analytics shows just how vital this segment is in the growth of the cloud.

Bloomberg has reported that mega-startup Snowflake has confidentially filed for an IPO with the U.S. Securities and Exchange Commission. The Financial Times reported that Snowflake’s valuation could land between $15 billion and $20 billion should that happen.

The news comes as Snowflake competitor Cloudera (Nasdaq: CLDR) is rumored to be seeking a buyer. And in a seemingly unrelated item that may be relevant, SQL database-as-a-service startup Yugabyte raised $30 million in a Series B round last week, bringing its total funding to $55 million.

Snowflake Scores Salesforce Support

Speculation about Snowflake’s future started with the company’s massive $479 Series G funding round in February 2020, led by Dragoneer Investment Group and Salesforce Ventures. At the time, the eight-year-old firm boasted a valuation of about $12.4 billion, and it pointed to a partnership with Salesforce (NYSE: CRM) as assurance of future success.

There was even talk that Salesforce might buy Snowflake. But that rumor has fizzled -- though the Salesforce arrangement could be a selling point for future investors for several reasons.

Salesforce holds a sizeable — nearly 20% — share of the customer relationship management (CRM) market, exceeding rivals Adobe (Nasdaq: ADBE), Microsoft (Nasdaq: MSFT), Oracle (NYSE: ORCL), and SAP (NYSE: SAP). Salesforce views data analytics as one of its top addressable markets, set for a CAGR or 11% over the next four years. And subscription services that rely on enterprise data account for over 90% of Salesforce revenues — a major boon in the ARR-obsessed cloud market.

But products integrating Salesforce with Snowflake aren't yet generally available. Snowflake recently announced Einstein Analytics Output Connector for Snowflake, which allows for easy integration of Salesforce data in Snowflake; and Einstein Analytics Direct Data for Snowflake, which lets users query Snowflake data from within Salesforce Einstein Analytics. But these won't be available until later this year, Snowflake says.

This detail, along with the uncertainties around the Snowflake IPO, make talk of synergies with Salesforce mostly speculation — despite ongoing robust growth on both sides.

Cloudera Wants Out of Market Malaise

It's been a rough ride for open-source analytics player Cloudera since its IPO in 2017. While that was a disappointment, things looked up this year, when the company’s financials evened out following a merger with rival Hortonworks, which strengthened both companies in a position against Amazon.

Now there’s speculation that Cloudera may be acquired by private equity firm or a larger player -- market analysts seem fixated on IBM, and with good reason: Cloudera’s strength as a Hadoop-enabled approach to data analytics led to a partnership with IBM in 2019. And Cloudera's machine learning capabilities fit with IBM’s stated goal of using AI to fuel cloud services.

But whether Big Blue sees sufficient value in actually buying Cloudera isn’t clear. Is IBM ready to spend over $4 billion in a deal involving Cloudera’s 18% stakeholder Carl Icahn? Is IBM ready to make that move while still digesting the acquisition of Red Hat, a $34 billion deal that only closed a year ago? Is IBM's brand-new CEO Arvind Krishna ready to stake his reputation on the buy? All of these remain open questions.

Yugabyte and VMware

Another data analytics news item was the recent funding of Yugabyte, which offers a cloud-native SQL database for webscale applications. Yugabyte claims features such as its use of open source software and support of hybrid cloud environments will help it in a field increasingly crowded by players like Amazon (via Redshift) and Microsoft (with Azure SQL Data Warehouse).

How can Yugabyte realistically hope to compete? It may follow the footsteps of Snowflake or Cloudera by leveraging a relationship with a big cloud partner — in Yugabyte’s case, VMware.

Yugabyte is already integrated with VMware’s Kubernetes development environment, Tanzu. That platform, recall, was formed when VMware integrated its $2.7 billion acquisition of Pivotal into its own solutions late in 2019.

Bill Cook, the co-founder of Pivotal, was recently appointed CEO of Yugabyte. Cook also worked at EMC, which was bought by Dell in 2015. And one of Yugabyte’s leading investors is Dell Technologies, a major stakeholder in both VMware and Pivotal.

Will the circle be unbroken? It’s too soon to tell.