Yahoo's reported plan to spin off its Hadoop engineering unit into a separate company, should it happen, could spur more competition in the already-growing field of providing support for this data processing framework, observers said.
On Wednesday, the Wall Street Journal reported that Yahoo is mulling the idea of setting up its Hadoop development team as a new standalone company, one that would continue to develop the software and offer Hadoop-related consulting services.
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"This is another good sign that the Hadoop space continues to grow," said Justin Borgman, co-founder and CEO of Hadapt, which provides tools for bridging Hadoop with data warehouses. "This will put the pressure on other Hadoop companies. The more competition the better."
Hadoop is "the biggest movement in enterprise software in years," Benchmark Capital partner Rob Bearden told the Wall Street Journal. Forrester Research senior analyst James Kobielus has estimated that the market for Hadoop products and services could grow to $1 billion per year.
Hadoop can process data that resides across multiple servers, making it suitable for analyzing larger amounts of information than the typical data warehouse can handle.
Yahoo has been instrumental in developing the Hadoop data processing platform, and it devotes considerable engineering resources to the project. Yahoo uses the technology for the data processing and analysis needed to personalize content and advertisements for users. Other giant Internet services, such as eBay, Facebook, and Twitter, also use the technology.
"Hadoop is the platform we run the company on. It's at the core of what we do," said Todd Papaioannou, Yahoo's vice president of cloud computing, in an interview with IDG last month. Yahoo did not immediately respond to a request for comment for this story.
Doug Cutting, the creator of Hadoop, joined Yahoo in 2006 to help the company develop the technology. He is now with Cloudera, which distributes a version of Hadoop. The Apache Foundation oversees Hadoop, which is an open-source project, though Yahoo contributes a sizeable portion of the new code for the project.
Designating its Hadoop team as its own entity makes sense for Yahoo, Hadapt's Borgman noted. Yahoo is primarily an Internet media company, and the market for Hadoop would be enterprises, a market Yahoo does not currently cater to.
"Maybe they feel that by spinning it out in a different company, it will have a better opportunity to pursue a different line of business," Borgman said.