Companies Make a Mint off Middle, but Big Data Market Still Uncertain

Loraine Lawson
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The Business Impact of Big Data

Many business executives want more information than ever, even though they're already drowning in it.

There's money in middleware. If you're IBM, there's LOTS of money there: Middleware products account for 64 percent of Big Blue's software revenue, according to InformationWeek, and software revenue grew to $6.1 billion in sales during this year's second quarter.

 

Last year, software earned IBM $9 billion, so if the company keeps on track for the rest of the year, it will easily surpass that amount.

 

IBM's biggest revenue source is Global Technology Services, but middleware is IBM's "profit engine," thanks to high profit margins, reports InformationWeek. While IBM's middleware offerings are well known - WebSphere, Information Management, Lotus, Tivoli and Rational products - you may be surprised to see what other offerings are categorized as middleware, the article notes:

WebSphere was particularly strong in the second quarter, growing 55 percent year over year. Beyond the application server, the WebSphere portfolio includes everything in IBM's business process management and Smarter Commerce categories. That means 2010 acquisitions including Cast Iron, Coremetrics, Sterling Commerce, and Unica all contributed to that 55 percent second-quarter increase. And let's not forget the 2009 and early 2010 acquisitions of ILog and Lombardi, respectively, that also now figure in WebSphere sales.

One point of particular and peculiar interest in the IBM report is the issue of Big Data's impact on profits. InformationWeek notes that IBM talked a big game about Big Data, but didn't offer the numbers to back it up:

IBM also shared plenty of claims about sexy-sounding categories like Smarter Commerce and Business Analytics, but those categories don't show up in the SEC filings with financial figures attached. As an example, IBM said this week that its cloud computing revenue will double in 2011, but from what to what? You won't find a dollar figure in the quarterly report. As InformationWeek has reported, Amazon, Google, and Microsoft also have been coy about their cloud computing revenue.


The company reported $26.7 billion in revenue for the second quarter, up over 12 percent over last year during the same period.

 

Likewise, Informatica boasted a jump in revenue this year as compared to last year - 24 percent to $192.7 million, according to a transcript quoting CEO Sohaib Abbasi. Licensing revenue made up the $86.3 million in Q2, he added.

 

So, apparently, integrating data isn't a bad gig, either.

 

Abbasi credited the company's growing portfolio with the revenue increase, but also pointed to Big Data as a growth opportunity in the near future. Support for Hadoop was a key part of Informatica 9.1, which the company released this spring.

 

Informatica is one of 10 companies listed by the Business Insider as one of the biggest firms by market cap involved in managing, analyzing or storing Big Data. EMC Corporation, VMware, Inc., and Infosys Technologies Limited are also listed - although, oddly, IBM is not.

 

There's no doubt Big Data will translate into big money for someone, although companies might not want to count their Hadoop chickens too soon. Ventana is warning that the market is still very much emerging and "unsettled." Information Management reports:

Few IT users marked themselves as 'very satisfied' with Hadoop for large data sets (30 percent), with 44 percent of business users finding the same level of satisfaction in the survey. Ventana remarked those levels-as well as big data's connection to virtualization-are representative of a vastly expanding but "immature" market.

While we're on the topic of profits and integration, a recent IT Jungle post notes that IDC is predicting spending on relational database management systems and data integration software will increase this year:

Current IDC projections for relational database management systems, or RDBMSes in the proper lingo for databases, added to data integration and access software that works in conjunction with databases, show that these combined categories will show 6.5 percent growth this year, hitting $33.9 billion. This follows a solid performance in the second half of 2010, when the market achieved year-over-year growth of 6.7 percent on revenues of $15.9 billion.


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