The Data Economy is an occasional analysis column by Wikibon Senior Analyst Jeff Kelly covering the business of Big Data.

Intel’s investment in Cloudera gives the Hadoop start-up yet more cash to play with, but the  more important aspect of the deal is the channel implications.

Prior to the Intel announcement, Cloudera competitor Hortonworks was clearly winning the battle for the channel. In the last year or so Hortonworks established reseller arrangements with three big hitters: Teradata, Microsoft and SAP (as well as a less significant deal with Rackspace.) Hortonworks’ open source strategy is purposefully OEM-friendly, and the company is betting on resellers kick into gear this year and possibly vault Hortonworks ahead of Cloudera in terms of annual revenue.

Wikibon estimates Hortonworks 2013 annual revenue at $55 million and Cloudera at $73 million. For complete vendor revenue estimates and market forecast, see our report from last month.

Cloudera’s biggest reseller partner is Oracle. Based on my reading of the Intel announcement, the deal is not an official reseller partnership, but Intel will “market and promote CDH and Cloudera Enterprise to its customers as its preferred Hadoop platform.” Not quite as nice as having the Intel salesforce closing deals for it, but Cloudera stands to gain significant new business from the arrangement.

By jettisoning its own Hadoop distribution and co-developing with Cloudera, including architecting Cloudera’s platform for Intel’s Xeon chips, Intel is essentially giving its seal of approval to Hadoop generally and Cloudera specifically as a strategic part of  the modern data infrastructure. Risk-averse CIOs in companies not based in Silicon Valley or Cambridge are much more likely to begin investing in Hadoop from a start-up such as Cloudera now that Intel has some flesh in the game.

From a technology standpoint, the deal is a good one for both companies. While Intel’s Hadoop distribution has not gained significant traction in the U.S. market, its engineering team has none-the-less made significant contributions to Hadoop’s security capabilities. These will now be married with Cloudera’s distribution and enterprise platform.

As for Intel’s entry into the Hadoop market in the first place, in my more cynical moments I viewed it not as a genuine effort to win the market with its own Hadoop distribution. Rather, the greater the adoption of Hadoop the more chips it sells. Hadoop is a distributed framework that practitioners can scale out simply by adding more commodity nodes. There are chips, and revenue, in each of those nodes for Intel, so it has more than a rooting interest in seeing Hadoop go mainstream. I’ve said over the last year that I don’t think Intel will care one lick if its Hadoop distribution comes in dead last in the Hadoop battle (adoption and revenue-wise), as long as the company succeeds in spurring rapid Hadoop adoption. I think this move proves me right.

It was never about the distribution for Intel. Cloudera is in a much stronger position today thanks to this Intel deal. It now has a clear answer to Hortonworks’ channel strategy. And, with the world’s biggest chip maker and corporate data center stalwart behind it, Cloudera’s prospects for competing with Pivotal and IBM to win the modern data platform just got a lot better.

photo credit: mrjoro via photopin cc