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HPE sells Vertica analytics, thanks to the growth of open source software

HPE is paring down its software holdings, including analytical database software in the Vertica line and other big data tools. A sale to Micro Focus is due to close next year, leaving users in some limbo for now.

IT vendors battled fiercely in recent years to generate their share of hyperbole around big data analytics. But Hewlett Packard Enterprise seems to be dropping out of that competition, and users of the company's software will now wait and see how that plays out.

HPE, the enterprise portion of a reconfigured Hewlett-Packard, last week revealed plans to sell Vertica, Autonomy and other software products to U.K.-based mainframe development house Micro Focus in what the two companies valued as an $8.8 billion deal.

The HPE software sell-off came on the heels of recent updates to Vertica analytics software that saw increased support for open source Hadoop and Spark integrations.

Autonomy, with longstanding unstructured data analytics packages, represents the bigger and more controversial part of the transaction. HPE's Autonomy purchase gained a place in the annals of troubled purchases for HPE and beyond. In 2011, what was called HP spent $11 billion to buy Autonomy, but after the fact, the company loudly contended it was snookered in the deal.

Removing Autonomy and other software from the portfolio enables HPE to pursue its goal to become a ''faster-growing, higher-margin and stronger free-cash-flowing organization,'' according to HPE CEO Meg Whitman. It also would close HPE's books on the widely panned Autonomy acquisition shepherded by Leo Apotheker, Whitman's CEO predecessor. 

Removing Vertica analytics from the ledger is a different matter. Through several years, it has earned repeated praise from Whitman as a growth-oriented product within HPE. But the analytics market in which Vertica now finds itself is a difficult one. It's a market heavily disrupted by open source software, such as Apache Hadoop and Spark, as well as cloud computing.

Focus and Micro Focus

Whitman said the divestiture of Autonomy, Vertica and other noncore software would give her company a "stronger go-to market capability," as it pursued initiatives for compute, storage, software-defined infrastructure, hybrid IT and internet of things processing at the edge.

Whitman said Micro Focus, as it takes over the former HPE software, would ensure higher levels of investment in growth areas like big data analytics and security. The message was these are things HPE was not ready to ensure going forward.

"For employees, Micro Focus's approach will mean each product line will have a clear and important role in the overall company performance, and employees will have a high level of clarity on the strategy for their organization," she said.

Full clarity may not be soon forthcoming for end users of Autonomy and Vertica software, however; the transaction isn't expected to be completed until the second half of 2017.

Vertica on hold?

"It's almost a year away. That's a long time for customers," said Sharon Cutter, principal at Zazz Technologies, a consultancy centered on Vertica implementations.

Cutter said Vertica has benefited under HPE's wing. HP purchased the analytical engine startup that created the technology in 2011, shortly before its Autonomy buy. Since then, HPE has kept Vertica's engineering team largely intact, said Cutter, a former employee of the startup.

It's almost a year away. That's a long time for customers.
Sharon Cutterprincipal, Zazz Technologies

But over time, she added, the general analytics landscape has changed, as cloud computing has become more prevalent, data volumes have increased and open source Hadoop products have evolved.

"There are a couple of different ways that customers are looking to reduce what they spend on analytical software," she said. "One way is with a cloud data warehouse, like AWS Redshift [from Amazon Web Services]. Spinning up a data warehouse on the cloud as needed has some advantages versus something like Vertica that must run 24/7."

Another area in which users are looking to save money is with open source software. Cutter said such software is affecting analytical software planning.

But, she said, emerging open source alternatives that couple Hadoop to SQL still have a ways to go.

"Vertica is a very mature solution," she said. That gives it an edge, for now, versus Hadoop-SQL combinations that have yet to achieve ultrahigh interactive performance -- what Cutter called speed-of-thought analytics.

"It is a few years away, but I am sure that it will get there," Cutter said of the emerging Hadoop-SQL open source alternatives.

Open source and cloud

Open source continues to have a major effect on the enterprise software business model, said Bob Bickel, a technology entrepreneur and application server industry veteran. That makes it difficult for incumbent players like HPE.

"New technology stacks are being built with open source tools, rather than proprietary stacks from legacy enterprise vendors," Bickel said. "It's more and more difficult for those software vendors to grow their business, and that creates pressures on how to move forward."

Bickel also pointed to cloud vendors like AWS, which can take new workloads to the cloud. That's a further stress on enterprise software vendors' business models, he said.

HPE isn't the only vendor that has decided on an exit strategy in the face of such pressures. Actian Corp. last month pulled the plug on its Actian Matrix analytical database and several associated products, saying it was shifting resources "to other, more predictable business segments."

Whither HPE software?

Despite the market challenges, HPE's broad retreat from application software is a questionable path, according to technology consultant Judith Hurwitz of Hurwitz & Associates LLC. "I don't think it's good for HPE to divest itself of such software," she said. "It leaves the company at risk for competing in an increasingly commoditized market."

It will also take time to build a new cohesive software company from the HPE and Micro Focus assets, she continued.

Going forward, the transfer of assets to Micro Focus will be watched closely. Users will look to see which parts of the HPE slate get most attention.

The first fit for Micro Focus would seem to be mainly around HPE's application delivery management software, said Doug Henschen, an analyst at Constellation Research Inc. In that regard, he pointed to software from the former Mercury Interactive, the test and performance specialist HP bought for about $4.5 billion in 2006.

"Customers of Vertica and Autonomy should take a cautious view of this deal and pay close attention to what Micro Focus has to say about plans for investment in these products," Henschen said.

Besides customers, HPE shareholders will take interest in such developments. They will have a slight majority stake -- 50.1% -- in the new company that Micro Focus and HPE form to consummate a deal that Whitman described as a ''spin-merge'' transaction.

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