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Explosive Snowflake IPO advances cloud data warehouse fortunes

Snowflake goes public in a big way on the New York Stock Exchange, raising more than $3 billion as enterprises increasingly move data and analytics workloads to the cloud.

Cloud data warehouse vendor Snowflake's explosive IPO, likely the biggest software IPO, accentuates the strength of the market for cloud data warehouse services and indicates that tech giants like AWS, Microsoft and Google face viable competition in the fast-growing arena.

Snowflake's shares on Wednesday were listed on the New York Stock Exchange under the ticker symbol SNOW with an initial price of $120 a share, valuing the company at more than $33 billion.

The cloud data warehouse vendor, based in San Mateo, Calif., was founded in 2012 and had raised $1.4 billion in venture capital funding. The company's last funding round was in February, when Snowflake raised $479 million from investors including Salesforce Ventures.

The IPO is seen by some industry watchers as a testament to the vitality of the data warehouse market, which has been moving quickly to the cloud and now is largely dominated by the cloud giants.

Rivals are bullish on Snowflake IPO

"Snowflake's IPO validates what we all know: The market for data warehouses is large and growing," said Neil Carson, CEO of data warehouse vendor Yellowbrick. "We share a common vision that data warehouse modernization is important, and we are excited to see how the market reacts to their IPO."

Any IPO in this space is a win for the industry and for businesses desperate for new data and analytics approaches.
Neil CarsonCEO, Yellowbrick

While Snowflake is a rival to Yellowbrick's hybrid data warehouse model that includes on-premises deployments as well as cloud, Carson said he sees the IPO as a positive move for the industry.

"Any IPO in this space is a win for the industry and for businesses desperate for new data and analytics approaches," Carson said.

The growing need for cloud data warehouses

Michael Howard, CEO of open source database vendor MariaDB, said famed investor Warren Buffet's involvement with Snowflake indicates a wider appeal for cloud data warehouse technology, outside of tech circles. Buffet's company, Berkshire Hathaway, invested about $500 million in the Snowflake IPO.

"Typically, his firm doesn't understand the business model around tech companies -- especially data warehouse companies -- so I think that is another indication of how widespread the appeal of tech is to Wall Street," Howard said.

The need for cloud data warehouse systems is also expanding among IT decision-makers.

A MariaDB-commissioned global survey of 559 IT professionals released Sept. 15 identified moving analytics data to the cloud as one of the most important cloud trends.

Snowflake IPO and cloud competition

With its IPO, Snowflake raises the profile of the now tightly competitive cloud data warehouse market.

Snowflake vies with a slew of cloud data warehouse systems, including Amazon Redshift, Google BigQuery, Microsoft Azure SQL Data Warehouse and SAP Data Warehouse, among others.

The public cloud providers in particular continue to aggressively advance their cloud data warehouse offerings. For example, in July Google released its BigQuery Omni platform, which enables multi-cloud capabilities that can challenge Snowflake.

But while Snowflake competes against the public cloud vendors, it is also reliant on them to deliver its services.

"In addition, our platform currently operates on public cloud infrastructure provided by Amazon Web Services (AWS), Microsoft Azure (Azure), and Google Cloud Platform (GCP), and our costs and gross margins are significantly influenced by the prices we are able to negotiate with these public cloud providers, which in certain cases are also our competitors," Snowflake stated in its S-1 IPO filing document.

Snowflake IPO and the path forward

Before Wednesday's IPO, Snowflake unveiled its last major platform update in June at the vendor's #SayHelloToTheDataCloud virtual conference.

During the event, Snowflake revealed a series of new capabilities that yielded insight into the overall direction it is taking in 2020 and beyond.

While the core foundation of Snowflake is its cloud data warehouse, the vendor is increasingly focusing on helping its users manage and organize data for analytics, wherever the data resides.

A key focus of the June updates was a series of new integrations designed to make is easier get data in and out of Snowflake.

The Snowflake Data Exchange helps users with data outside of their enterprise, while Snowflake's Data Marketplace provides a listing of data sets and sources that users can access. Snowflake's June platform update also enhanced its ability to help users build data pipelines that integrate with third-party data sources.

The path toward the Snowflake IPO was established in June, when the company confidentially filed for an IPO. The official public filing with the U.S. Securities and Exchange Commission followed on Aug. 24.

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