Alibaba issued its latest earnings report yesterday, and the Chinese eCommerce giant reported that cloud revenue grew 62 percent to $ 1.5 billion U.S., crossing the RMB10 billion revenue threshold for the first time.
Alibaba also announced that it had completed its migration to its own public cloud in the most recent quarter, a significant milestone because the company can point to its own operations as a reference to potential customers, a point that Daniel Zhang, Alibaba executive chairman and CEO, made in the company’s post-earnings call with analysts.
“We believe the migration of Alibaba’s core e-commerce system to the public cloud is a watershed event. Not only will we ourselves enjoy greater operating efficiency, but we believe, it will also encourage others to adopt our public cloud infrastructure,” Zhang said in the call.
It’s worth noting that the company also warned that the Coronavirus gripping China could have impact on the company’s retail business this year, but it didn’t mention the cloud portion specifically.
Yesterday’s revenue report puts Alibaba on a $ 6 billion U.S. run rate, good for fourth place in the cloud infrastructure market share race, but well behind the market leaders. In the most recent earnings reports, Google reported $ 2.5 billion in revenue, Microsoft reported $ 12.5 billion in combined software and infrastructure revenue and market leader AWS reported a tad under $ 10 billion for the quarter.
As with Google, Alibaba sits well in the back of the pack, as Synergy Research’s latest market share data shows. The chart was generated before yesterday’s report, but it remains an accurate illustration of the relative positions of the various companies.
Alibaba has a lot in common with Amazon. Both are eCommerce giants. Both have cloud computing arms. Alibaba, however, came much later to the cloud computing side of the house, launching in 2009, but really only beginning to take it seriously in 2015.
At the time, cloud division president Simon Hu boasted to Reuters that his company would overtake Amazon in the cloud market within 4 years. “Our goal is to overtake Amazon in four years, whether that’s in customers, technology, or worldwide scale,” he said at the time.
They aren’t close to achieving that goal, of course, but they are growing steadily in a hot cloud infrastructure market. Alibaba is the leading cloud vendor in China, although AWS leads in Asia overall, according to the most recent Synergy Research data on the region.
As the number of IoT devices proliferate, and machines conduct transactions with machines without humans involved, it becomes increasingly necessary to have a permissionless system that facilitates this kind of communication in a secure way.
Enter the IOTA Foundation, a Berlin-based open source distributed ledger technology (DLT) project, which has hooked up with the Eclipse Foundation to bring IOTA DLT to the enterprise via the Tangle EE project. For starters, this involves forming a working group.
The distributed ledger idea first emerged as a way to distribute digital currency on the blockchain. Since then, there have been multiple ideas, both open source and commercial, to bring this concept to the enterprise to provide a secure, immutable and frictionless way to share data.
One such open source project is IOTA, which saw an issue with DLT as it was being implemented by other entities. “IOTA is the first distributed ledger technology that went beyond blockchain with a completely new architecture that resolves the bottleneck problems of blockchain that has prevented real world adoption,” Dominik Schiener, co-founder of IOTA Foundation told TechCrunch.
The broad vision is to provide a way for machines and devices to communicate securely. “We provide a protocol layer that enables both humans and machines to bulk transact value without fees, as well as ensure data integrity, which is of course, increasingly important in the age of Internet of Things where hundreds of billions of devices are being connected over the next decades,” Schiener said.
Tangle EE is the part of the project aimed at enterprise users — EE stands for Enterprise Edition — that can take this technology and enable larger organizations to build applications on top of the project. For starters the foundation is working with the Eclipse Foundation to bring corporate entities on board who can help better define the requirements of the large business user.
Dell Technologies and STMicroelectronics are the first major companies joining the project, but the hope is that through discussion and dialogue, Tangle EE will begin to gain traction. “The main reason why we created Tangle EE was because of the discussions that we’ve had with corporations. They really understood that we need to have a working group around IOTA to discuss the application layer, to discuss what kind of solutions we can develop broadly across industries, but also really start having more serious discussions about the protocol,” Schiener said.
Much like the Linux Foundation, the Eclipse Foundation will provide a governance framework for the project. “The Eclipse Foundation will provide a vendor-neutral governance framework for open collaboration, with IOTA’s scalable, feeless and permissionless DLT as a base,” Mike Milinkovich, executive director of the Eclipse Foundation explained in a statement.
If it gains traction, more companies will join in the coming months and years, and begin building out Tangle EE, while developing applications based on the protocol.
Infor, which makes large-scale cloud ERP software, has been around since 2002 and counts Koch as both a customer and an investor, so the deal makes sense on that level. Koch was lead investor last year in a $ 1.5 billion investment where the company indicated that it was a step before going public.
It’s not clear if that is still the goal, as sources suggested that staying private might provide the company with more capital flexibility in the future.
Under the terms of the deal, Koch will be buying out the remaining equity stake in Golden Gate Capital, a secondary investor in last year’s investment. The company’s management team will remain in place and Infor will act as a stand-alone subsidiary of Koch.
Company CEO Kevin Samuleson, as you would expect, saw the deal as a positive move that allowed the company to operate with a well capitalized parent behind it. “As a subsidiary of a $ 110 billion+ revenue company that re-invests 90% of earnings back into its businesses, we will be in the unique position to drive digital transformation in the markets we serve,” he said in a statement.
Jim Hannan, executive vice president and CEO of enterprises for Koch Industries saw it similarly with Koch’s deep pockets helping to propel Infor in the future. “As a global organization spanning multiple industries across 60 countries, Koch has the resources, knowledge and relationships to help Infor continue to expand its transformative capabilities,” he said in a statement.
Holger Mueller, an analyst at Constellation Research, says it’s a strange deal on its face, but if Koch leaves Infor alone, it might work out. “When you think you have seen it all, something new comes along: A regular enterprise buys a top five ERP vendor. Now [we’ll have to see] if Koch can ensure Infor keeps building market leading software, using Koch as showcase, or becomes the Koch software affiliate.
“The latter would be an unfortunate outcome. On the positive side, enterprise software built from real user validation, that can also serve as a reference, can be very powerful,” Mueller told TechCrunch. He said it could work out great, but also has the potential to go very wrong, depending on how Koch manages a software asset.
Infor is a huge company. As we reported last year at the time of its investment:
Infor may be the largest company you never heard of, with more than 17,000 employees and 68,000 customers in more than 100 countries worldwide. All of those customers generated $ 3 billion in revenue in 2018. That’s a significant presence.
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Krishna, IBM’s senior vice president for cloud and cognitive software, will take over on April 6 after a couple months of transition. Rometty will remain with the company as chairman of the board.
Krishna reportedly drove the massive $ 34 billion acquisition of Red Hat at the end of 2018, and there was some speculation at the time that Red Hat CEO Jim Whitehurst was the heir apparent. Instead, the board went with a more seasoned IBM insider for the job, while naming Whitehurst as president.
The redesigned app will include more accurate information overall as well as comprehensive views of roads, buildings, parks, airports, malls and other public places. It will also bring Look Around to more cities and real-time transit to Miami.
The company, Social Captain, says it helps thousands of users to grow their Instagram follower counts by connecting their accounts to its platform. But TechCrunch learned this week Social Captain was storing the passwords of linked Instagram accounts in unencrypted plaintext.
That is a real headline and I probably don’t need to say much else. Listen to the track, or don’t.
Crystal McKellar played Becky Slater on “The Wonder Years,” and she writes about how that experience prepared her to be a managing partner at Anathem Ventures. (Extra Crunch membership required.)
High-end fashion might not be the first thing that comes to mind when you think about online shopping, but it has actually been a ripe market for the e-commerce industry.
Vue launched in March 2015, offering live and on-demand content from more than 85 channels, including many local broadcast stations. But it failed to catch on with a broader audience, despite — or perhaps, because of — its integration with Sony’s PS3 and PS4 devices, and it shut down this week. (Extra Crunch membership required.)
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
SaaS stocks had a good run in late 2019. TechCrunch covered their ascent, a recovery from early-year doldrums and a summer slowdown. In 2020 so far, SaaS and cloud stocks have surged to all-time highs. The latest records are only a hair higher than what the same companies saw in July of last year, but they represent a return to form all the same.
Given that public SaaS companies have now managed to crest their prior highs and have been rewarded for doing so with several days of flat trading, you might think that there isn’t much room left for them to rise. Not so, at least according to Atlassian . The well-known software company reported earnings after-hours yesterday and the market quickly pushed its shares up by more than 10%.
Why? It’s worth understanding, because if we know why Atlassian is suddenly worth lots more, we’ll better grok what investors — public and private — are hunting for in SaaS companies and how much more room they may have to rise.
Snyk, the company that wants to help developers secure their code as part of the development process, announced a $ 150 million investment today. The company indicated the investment brings its valuation to over $ 1 billion (although it did not share the exact figure).
Today’s round was led by Stripes, a New York City investment firm with help from Coatue, Tiger Global, BoldStart,Trend Forward, Amity and Salesforce Ventures. The company reports it has now raised over $ 250 million.
The idea behind Snyk is to fit security firmly in the development process. Rather than offloading it to a separate team, something that can slow down a continuous development environment, Snyk builds in security as part of the code commit.
The company offers an open source tool that helps developers find open source vulnerabilities when they commit their code to GitHub, Bitbucket, GitLab or any CI/CD tool. It has built up a community of over 400,000 developers with this approach.
Snyk makes money with a container security product, and by making the underlying vulnerability database they use in the open source product available to companies as a commercial product.
CEO Peter McKay, who came on board last year as the company was making a move to expand into the enterprise, says the open source product drives the revenue-producing products and helped attract this kind of investment. “Getting to [today’s] funding round was the momentum in the open source model from the community to freemium to [land] and expand — and that’s where we are today,” he told TechCrunch.
He said that the company wasn’t looking for this money, but investors came knocking and gave them a good offer, based on Snyk’s growing market momentum. “Investors said we want to take advantage of the market, and we want to make sure you can invest the way you want to invest and take advantage of what we all believe is this very large opportunity,” McKay said.
In fact, the company has been raising money at a rapid clip since it came out of the gate in 2016 with a $ 3 million seed round. A $ 7 million Series A and $ 22 million Series B followed in 2018 with a $ 70 million Series C last fall.
The company reports over 4X revenue growth in 2019 (without giving exact revenue figures), and some major customer wins including the likes of Google, Intuit, Nordstrom and Salesforce. It’s worth noting that Salesforce thought enough of the company that it also invested in this round through its Salesforce Ventures investment arm.
Meet Harvestr, a software-as-a-service startup that wants to help product managers centralize customer feedback from various places. Product managers can then prioritize outstanding issues and feature requests. Finally, the platform helps you get back to your customers once changes have been implemented.
The company just raised a $ 650,000 funding round led by Bpifrance, with various business angels also participating, such as 360Learning co-founders Nicolas Hernandez and Guillaume Alary, as well as Station F director Roxanne Varza through the Atomico Angel Programme.
Harvestr integrates directly with Zendesk, Intercom, Salesforce, Freshdesk, Slack and Zapier. For instance, if a user opens a ticket on Zendesk and another user interacts with your support team through an Intercom chat widget, everything ends up in Harvestr.
Once you have everything in the system, Harvestr helps you prioritize tasks that seem more urgent or that are going to have a bigger impact.
When you start working on a feature or when you’re about to ship it, you can contact your users who originally reached out to talk to you about it.
Eventually, Harvestr should help you build a strong community of power users around your product. And there are many advantages in pursuing this strategy.
First, you reward your users by keeping them in the loop. It should lead to higher customer satisfaction and lower churn. Your most engaged customers could also become your best ambassadors to spread the word around.
Harvestr costs $ 49 per month for five seats and $ 99 per month for 20 seats. People working for 360Learning, HomeExchange, Dailymotion and other companies are currently using it.
Equinix has a set of data centers and co-locations facilities around the world. Companies that may want to have more control over their hardware could use their services including space, power and cooling systems, instead of running their own data centers.
Equinix is getting a unique cloud infrastructure vendor in Packet, one that can provide more customized kinds of hardware configurations than you can get from the mainstream infrastructure vendors like AWS and Azure.
Interestingly, COO George Karidis came over from Equinix when he joined the company, so there is a connection there. Karidis described his company in a September, 2018 TechCrunch article:
“We offer the most diverse hardware options,” he said. That means they could get servers equipped with Intel, ARM, AMD or with specific nVidia GPUs in whatever configurations they want. By contrast public cloud providers tend to offer a more off-the-shelf approach. It’s cheap and abundant, but you have to take what they offer, and that doesn’t always work for every customer.”
In a blog post announcing the deal, company co-founder and CEO Zachary Smith had a message for his customers, who may be worried about the change in ownership, “When the transaction closes later this quarter, Packet will continue operating as before: same team, same platform, same vision,” he wrote.
He also offered the standard value story for a deal like this, saying the company could scale much faster under Equinix than it could on its own with access to its new company’s massive resources including 200+ data centers in 55 markets and 1,800 networks.
Sara Baack, chief product officer at Equinix says bringing the two companies together will provide a diverse set of bare metal options for customers moving forward. “Our combined strengths will further empower companies to be everywhere they need to be, to interconnect everyone and integrate everything that matters to their business,” she said in a statement.
While the companies did not share the purchase price, they did hint that they would have more details on the transaction after it closes, which is expected in the first quarter this year.
AWS took a hard blow last year when it lost the $ 10 billion, decade-long JEDI cloud contract to rival Microsoft. Yet even without that mega deal for building out the nation’s Joint Enterprise Defense Infrastructure, the company remains fully in control of the cloud infrastructure market — and it intends to fight that decision.
In fact, AWS still owns almost twice as much cloud infrastructure market share as Microsoft, its closest rival. While the two will battle over the next decade for big contracts like JEDI, for now, AWS doesn’t have much to worry about.
There was a lot more to AWS’s year than simply losing JEDI. Per usual, the news came out with a flurry of announcements and enhancements to its vast product set. Among the more interesting moves was a shift to the edge, the fact the company is getting more serious about the chip business and a big dose of machine learning product announcements.
The fact is that AWS has such market momentum now, it’s a legitimate question to ask if anyone, even Microsoft, can catch up. The market is continuing to expand though, and the next battle is for that remaining market share. AWS CEO Andy Jassy spent more time than in the past trashing Microsoft at 2019’s re:Invent customer conference in December, imploring customers to move to the cloud faster and showing that his company is preparing for a battle with its rivals in the years ahead.
AWS closed 2019 on a $ 36 billion run rate, growing from $ 7.43 billion in in its first report in January to $ 9 billion in earnings for its most recent earnings report in October. Believe it or not, according to CNBC, that number failed to meet analysts expectations of $ 9.1 billion, but still accounted for 13% of Amazon’s revenue in the quarter.
Regardless, AWS is a juggernaut, which is fairly amazing when you consider that it started as a side project for Amazon .com in 2006. In fact, if AWS were a stand-alone company, it would be a substantial business. While growth slowed a bit last year, that’s inevitable when you get as large as AWS, says John Dinsdale, VP, chief analyst and general manager at Synergy Research, a firm that follows all aspects of the cloud market.
“This is just math and the law of large numbers. On average over the last four quarters, it has incremented its revenues by well over $ 500 million per quarter. So it has grown its quarterly revenues by well over $ 2 billion in a twelve-month period,” he said.
Dinsdale added, “To put that into context, this growth in quarterly revenue is bigger than Google’s total revenues in cloud infrastructure services. In a very large market that is growing at over 35% per year, AWS market share is holding steady.”
Dinsdale says the cloud infrastructure market didn’t quite break $ 100 billion last year, but even without full Q4 results, his firm’s models project a total of around $ 95 billion, up 37% over 2018. AWS has more than a third of that. Microsoft is way back at around 17% with Google in third with around 8 or 9%.
It would be hard to do any year-end review of AWS without discussing JEDI. From the moment the Department of Defense announced its decade-long, $ 10 billion cloud RFP, it has been one big controversy after another.