Home / Tech / As its CEO prepares to step down, $1.4 billion Cloudera says it will start giving away all its software for free in a big change to its business (CLDR)

As its CEO prepares to step down, $1.4 billion Cloudera says it will start giving away all its software for free in a big change to its business (CLDR)

Tom Reilly, the outgoing chief executive officer of Cloudera, attends the second day of the annual Allen & Company Sun Valley Conference, July 12, 2017 in Sun Valley, Idaho.

  • On Wednesday, Cloudera announced it will make all its software available as open source, and instead it will focus on providing support, consulting, training, and updates to subscribing customers.
  • This announcement comes a month after Cloudera CEO Tom Reilly announced he would resign, but the company says that it’s in this for the long haul. 
  • Cloudera has been working to transition its business model since it merged with Hortonworks in January.
  • The big idea is to align its business with that of Red Hat — the open source software giant that IBM just purchased for $34 billion. 
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Cloudera has already seen some big changes this year. Six months ago, it merged with Hortonworks, once its biggest rival in the big data analysis market. About a month ago, Cloudera suffered its worst day on the markets ever, losing some 42% of its value, even as CEO Tom Reilly announced his departure. 

But before Reilly officially leaves the company at the end of the month, Cloudera is making a big change to its business model that will see it give away all of its products for free — and charge businesses for services and support. 

The plan, Cloudera tells Business Insider, is that by February, all of Cloudera’s software will be available under the open source Apache Software License or the Affero General Public License, meaning any of it will be free to anyone and everyone to download, modify, and use as they wish. That includes features that customers might previously have had to pay for. 

Cloudera modeled this approach on Red Hat, the open-source software giant which was officially acquired this week by IBM for $34 billion. Much like Red Hat and its flagship Enterprise Linux product, Cloudera plans to sell subscriptions that grant access to consulting services, support, training, and tools for more quickly installing new releases and security patches to its data analysis software. 

“We went out and had quite a bit of feedback from our customers,” Todd Sylvester, VP of strategy at Cloudera, told Business Insider. “We talked to industry experts. We talked to some of our peer companies. It’s aligned to the Red Hat model that exists today. We are adopting that model as well.”

‘100% committed’

both Cloudera and Hortonworks are based at their core on Hadoop, a popular open source software project that was originally started at Yahoo. Both offered free open source versions of their tools, but favored different licensing schemes. Further complicating matters was the fact that Cloudera had a paid, premium version for businesses, built on top of the open source software. 

Sylvester, who came to Cloudera in the Hortonworks merger, said that immediately after the tie-up, the newly-combined company wanted a business model that was “100% committed to open source,” but streamlined to use the same pair of licenses to make it easier for users and customers to understand. 

“This is something we’ve been working on since day one,” Sylvester said. 

Meanwhile, while Reilly might be leaving, Sylvester says that this business model is here to stay.

“What we’re pushing to is really that transparency,” Sylvester said. “Tom’s vision was continuing to drive momentum to our cloud investment. Those are all key tenets that the board and leadership team continues to drive after Tom retires. We’re trying to execute based on that.”

Cloudera isn’t the only open source-based software company that has changed its business model. Chef also made the decision to make all its software open source and focus on customer service, support, and software updates, in a similar manner.

Read more: $360 million IT automation startup Chef is ‘bucking’ a ‘distinct trend’ in open source software with a big bet on making all of its products totally free

Meanwhile, other companies like Redis Labs, MongoDB and Confluent have gone in the other direction. 

To defend against what they see as a threat from cloud platforms like Amazon Web Services and Alibaba — which often take open source code, package it up, and sell it to customers as a service for a profit — these companies, known for leading major open source projects, written new software licenses that place restrictions on how their code can be used, sparking a fierce debate in the open source community. 

Cloudera looked to these companies for examples, but it decided not to pursue that route. Sylvester says that’s because creating a license takes too much effort, while existing open source licenses fit in well with what it was trying to achieve — especially given the fact that many of its customers run the free, open source Linux operating system.

SEE ALSO: Amazon is reportedly making over $100 million from one of its open source businesses — but the CEO behind the original software says Amazon isn’t slowing down its business

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