Big Data

Top Predictions about Software Companies in 2014

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Editor’s note: In checking the pulse of the software industry as we move into the coming year, we asked several industry-leading experts who regularly contribute content to SandHill to share their opinions.  Here are their predictions for which companies will be the most interesting to watch in 2014, who will win in the clash of titans, and which companies will significantly alter the vendor landscape.

Q: What are your top predictions about changes we’ll see in software companies in 2014?

Tim Yeaton, CEO, Black Duck Software:

  • We are likely to see some solid, private software companies testing the IPO market. Companies like Atlassian, Veracode, Acquia and Coverity are some great companies in Black Duck’s part of the market that seem likely to have an IPO in 2014. Hortonworks and Cloudera in the Hadoop space are worth watching as well.
  • Given the struggles that the big players are having in finding organic growth, coupled with their expanding cash balances, we are likely to see an acquisitive software market — much as we’ve seen over the past several months.
  • We are at the point where every commercial software company will need an explicit open source strategy to be viable — at a minimum, being a consumer and, over time, contributing to and creating open source projects and communities around their core offerings.

Guy Smith, Chief Consultant, Silicon Strategies Marketing:

  • Microsoft will continue to fritter away their market position and brand.
  • Google (the new U.S. economy) will grow so large and powerful that antitrust lawyers will start formulating an attack plan.
  • Apple’s brand will start harboring worms since they are unable to rekindle the Jobs magic.

Amr AwadallahAmr Awadallah, Chief Technology Officer, Cloudera:

  • Enterprise data warehouses at large, and Teradata in particular, will continue to struggle in 2014 due to significant pricing erosion from the cloud providers (e.g., Redshift from Amazon, and I expect similar services from Google and Microsoft). They will also continue to face pricing pressures from open source Big Data technologies.
  • VMware will start to struggle due to the external cloud being a more competitive alternative to internal infrastructure, and OpenStack reaching maturity for on-premises cloud environments.
  • NetApp is significantly behind when it comes to flash storage solutions. I expect then to struggle in 2014 if they don’t make a significant acquisition to catch up.
  • I expect consolidation in the Big Data startups space. Some companies will start to close their doors, while others will probably get acquired (e.g., MapR and Hortonworks).

Paul ResslerPaul Ressler, Principal, The Cirrostratus Group:

Software companies will focus on:

  • Integration with other solutions
  • Overall solution performance
  • Extending their mobile offerings 

Q: Which software companies do you think will be the most interesting to watch in 2014? Why?

Guy Smith, Chief Consultant, Silicon Strategies Marketing:

  • Google will be tops. The only organization more adept at getting benefit from massive cross-integration of data is the NSA, and frankly I think they are second bananas. Google will continue to find great ways of monetizing the gobs of data they control or access. More interesting is how they are slowly usurping desktop computing, which cripples Microsoft. A $1,500 share price is not unthinkable.
  • Oracle is always interesting, but they appear to have hit a plateau. With open source eating away at nearly everything, they may have a tougher time adding value in the market.
  • Autodesk remains a point of fascination for me, for they are mastering global design. With a global economy, bright engineers around the planet and sources from all corners therein, Autodesk is the hub for their activities.
  • VMware will be one to watch because cloud computing alternatives may have choked off their growth. Without significant new integrated value, and with open source alternatives providing public/private cloud operations, they may have seen their best days.
  • Microsoft will be very interesting to watch once their new CEO is selected. Either a solid recovery plan will be created or we will see Titanic II.

Paul Ressler, Principal, The Cirrostratus Group:

  • Will Intuit’s strategy for an application marketplace work, and will their strategy to move applications to SaaS applications continue to work?
  • What will SAP do to position themselves as a cloud leader?
  • Salesforce needs to continue to expand. What will their next step be: buy or be bought?
  • How will Microsoft Azure continue to develop? Don’t count Microsoft out. Azure will continue to make good progress.
  • Will large multinationals start migrating to NetSuite’s ERP solutions at the expense of SAP?
  • Oracle will be interesting to watch in 2014. They have now embraced the cloud and made peace with some of their competitors such as Microsoft and Salesforce.
  • Oracle and Salesforce will move forward in 2014, and Microsoft likely will make progress; but SAP likely will continue to lag in the move to the cloud.

Amr Awadallah, Chief Technology Officer, Cloudera:

  • Red Hat — I predict that Red Hat’s OpenStack offering will quickly rise to be the dominant option for on-premises cloud environments, significantly challenging the VMware monopoly in that segment.
  • Amazon Web Services — This is an obvious one to call out, but Amazon will continue its significant dominance as the best external cloud provider for infrastructure and platform hosting. I expect AWS to be spun out as a separate company in 2014 to unlock the value trapped in it.
  • Dropbox — It will be very interesting to watch Dropbox in 2014 to see whether it can continue its dominance for file sharing and expand beyond consumers into the enterprise. There are a number of startups coming after it with cheaper and more capable solutions (e.g., box.net and Hightail), and the big players aren’t standing still either (e.g., Google Drive, Microsoft SkyDrive). The migration cost for moving files inside from Dropbox is very low, so it will be interesting to watch if it can defend its lead. I predict Amazon will either acquire Dropbox or will start offering its own file-sharing service to keep the higher margins for itself.
  • Workday — A great success story from 2013. The key thing to watch now is if they can capitalize on that success to expand beyond their HR origins. They are adding a number of other enterprise software products (e.g., ERP) to mount a full frontal assault on the market dominated by Oracle and SAP. It will be very entertaining to see how that war unfolds.
  • Cloudera — As the leader for the EDH (Enterprise Data Hub) and Big Data processing platforms, Cloudera will continue to generate significant growth by enabling enterprises to ask bigger questions of their data for a fraction of the cost of legacy technologies. (Disclaimer: I work for Cloudera.)

Dan MillerDan Miller, General Manager, Software Vertical, NetSuite:

  • Box is transforming file sharing and online collaboration for everyone from individual users to Fortune 100 companies and was named winner of the NetSuite 2013 SuiteCloud Innovative Partner award.
  • RingCentral is breaking down the communication barriers created by complex on-premise hardware with cloud solutions that free people to work the way they want to in today’s mobile, distributed world; with more than 300,000 customers, RingCentral executed a successful IPO in September 2013 and recently reported that Q3 2013 revenue surged 42 percent year-over-year.
  • Fast-growing RocketFuel, ranked #4 on Forbes’ 2013 Most Promising Companies in America list, is reshaping the ad tech market with data-driven artificial intelligence solutions that connect consumers with brands. The company enjoyed a smashing IPO in September 2013 and reported a 132 percent surge in Q3 2013 revenue.
  • Visual data analytics vendor Tableau Software is disrupting the BI space with a patented query language and ability to perform ad hoc analysis on extremely large data sets in seconds, going public in May with a successful IPO and reporting a 90 percent gain in Q3 2013 revenue.
  • DocuSign is transforming how organizations send, sign, track and store documents with its fast, secure and mobile-enabled cloud e-signature solutions, used by more than 40 million individual and corporate users in 188 countries, with more than 60,000 joining its global network every day. 

Q: Which software industry clashes of titans will be the most interesting to watch in 2014? Who will win these battles for dominance?

Guy Smith, Chief Consultant, Silicon Strategies Marketing:

  • Google v. Apple — Android, already the global smartphone champ, is not slowing down. As Google increases control over vendor partners, the Android UX, and brings more hardware expertise in house, Android becomes even more of a threat to iOS. (If Google starts offering a free cloud sync comparable to iCloud, they will kick away Apple’s remaining differentiator). Apple is struggling to regain their mojo; and if they don’t, Android will get more of Apple’s market share.
  • OpenStack v. everybody — OpenStack is doing to cloud infrastructure what Linux did to server operating systems: becoming a viral threat. This pits OpenStack against Google, Amazon, Citrix, maybe even VMware and a few other bigwigs. But like Linux, its vendor-agnostic nature and open source bias is making it a darling for enterprises with major cloud ambitions and those that want to avoid vendor lock-in.

Tim Yeaton, CEO, Black Duck Software:

  • To me, it’s the battles themselves that are most interesting among the titans, and if I were any good at predicting winners I would no longer be working for a living! With that in mind, the first big battle that is worth watching is the fight to control cloud infrastructure as a service (IaaS). Amazon is in the lead with public cloud. Yet the fight for private cloud infrastructure among the OpenStack vendors, VMware, Eucalyptus, etc. is where I believe most of the action will be in 2014, since it’s where I see the most acceleration in production adoption.
  • The battle for corporate developer mindshare will also be interesting to watch. GitHub is attempting to enter the enterprise by leveraging their four million+ developer community, and Atlassian is making incredible strides via their free-to-fee developer engagement strategy. Plus the traditional ALM vendors are trying to reinvent themselves to regain developer mindshare.

Amr Awadallah, Chief Technology Officer, Cloudera:

  • AWS will continue to take away business from IBM, VMware and others.
  • VMware will continue to lose business to AWS but also will start to lose significant business to Red Hat’s OpenStack solution.
  • Oracle will continue to lose significant business to SaaS providers like Salesforce, Workday and NetSuite. They will also continue to bleed to new-generation data analytic companies like Tableau, Splunk, QlikTech and others.
  • Teradata will continue to lose on the high end to competition from Oracle Exadata, IBM Netezza, HP Vertica, SAP HANA and Pivotal Greenplum. At the same time they will experience significant pricing pressures from new open source Big Data platforms.
  • NetApp — I am very curious to see how NetApp will counter the flash onslaught from new startups and other established vendors like EMC/Hitachi.
  • Cisco — It is interesting to continue to see Cisco evolve to be a full-fledged data center provider and not just a network switch provider. This year they added storage to their networking and servers portfolio, so it is clear their goal is to sell a full data center. That obviously collides with EMC, Oracle, HP and IBM (not to mention Dell in the background). So it will be very interesting to watch how this unfolds.

Amr Awadallah is chief technology officer at Cloudera. Before co-founding Cloudera in 2008, Amr (@awadallah) was an Entrepreneur-in-Residence at Accel Partners. Prior to joining Accel he served as Vice President of Product Intelligence Engineering at Yahoo!, and ran one of the very first organizations to use Hadoop for data analysis and business intelligence. Amr joined Yahoo after they acquired his first startup, VivaSmart, in July of 2000.

Dan Miller is general manager, software vertical at NetSuite. He brings over 25 years of professional experience to NetSuite, most recently as SVP and CFO of Nexant where he managed accounting and IT corporate service groups, and led financing initiatives to support strategic growth plans. He began his career as a senior accountant with Deloitte & Touche, subsequently serving as senior treasury manager for Genentech and corporate controller for Extreme Networks before moving to executive roles.

Paul Ressler is a consultant specializing in service delivery for SaaS, cloud computing and managed services. As the principal of The Cirrostratus Group, Paul helps his clients improve customer satisfaction, raise service margins, introduce profitable new services and transition to the SaaS business model.

Guy Smith is the chief marketing strategist and founder of Silicon Strategies Marketing. He is also the author of the Start-up CEO’s Marketing Manual (available in print and Kindle editions), a rapid-fire boot camp to ensure that founders will guide their teams and marketing employees away from the common cliffs of epic failure.

Tim Yeaton is CEO at Black Duck Software, which achieved 30 percent growth and built a worldwide operation in 24 countries.  Black Duck is a top 500 software company and named a Top Place to Work.  In his 30 years of experience, he was CMO at Red Hat, CEO of Avaki and EVP of Products at Allaire and VP/GM of UNIX/Middleware at Compaq. Tim was named one of the Most Influential People in the FOSS and named a COPU Think Tank Advisor.

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