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Intel Takes Massive $740 Million Stake in Cloudera

The chip giant throws its weight behind Hadoop in the data center.

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Last week’s investment by chipmaker Intel in the big-data software company Cloudera has turned out to be significantly bigger than anyone suspected: $740 million.

Cloudera today disclosed that the $160 million funding round it announced two weeks ago has grown to $900 million, and that Intel’s investment is sufficient to give it an 18 percent ownership stake. By my math, that would value Cloudera at about $4.1 billion, or nearly six times its valuation in its previous funding round, when it was valued at about $700 million.

The deal has a lot of important implications. Cloudera has in recent months sought to compare itself not to other Hadoop players like Hortonworks and MapR, and EMC’s Pivotal, but as a competitive threat to larger and more established suppliers of business analytics software like IBM and Teradata.

By implication that includes other analytics software players, including Oracle, SAP and Hewlett-Packard’s Vertica, many of which are also big Intel customers.

By backing Cloudera so strongly, Intel is essentially throwing its weight behind Hadoop, specifically Cloudera’s version of it, as a fundamental technology of enterprise data centers and competing against those customers.

Cloudera has previously said it will optimize its platform for Intel’s Xeon chips, which are a primary building block in most data centers anyway, running in about 95 percent of most servers. Intel has said it will stop development work on its own version of Hadoop and will help its existing customers transition to Cloudera.

Other investors in the round include T. Rowe Price, MSD Capital (Michael Dell’s personal investment firm) and Google Ventures.

Hadoop is an open-source project that sprang out of Yahoo and is overseen by the nonprofit Apache Foundation. For the last several years, it has been adopted by large companies on an experimental basis. As companies have struggled to get their heads around “big data” — the notion that useful business insights can come from a thorough analysis of data gathered in the course of daily operations — they have increasingly turned to Hadoop technologies to simplify the process.

Last week, Hortonworks announced it had landed a $100 million investment round led by investment firm BlackRock and Passport Capital ahead of an initial public offering that is expected by early 2015.

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