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Smaller Businesses Drive Big Data's Growth

Next-generation point-solution providers lead the pack, but legacy vendors could turn to M&A to catch up in analytics.

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Although it's early in the Big Data analytics cycle, we believe several important trends are apparent in this rapidly evolving segment of the technology sector: (1) Competition is heating up as next-generation providers are winning in the greenfield space by quickly deploying point solutions, while legacy vendors are playing from behind, despite--and because of--their stack dominance. (2) Cloud-based solutions may provide an opening for new entrants to the small and midsize business and greenfield market. (3) While there are no clear winners or losers yet, we believe  Tableau (DATA) leads the pack and  Qlik (QLIK) and  Splunk (SPLK) occupy the middle ground, while Spotfire (from Tibco) and the stack vendors must refine their products and strategies.

Our evaluation hinges on what we have determined are critical components to the current rapid adoption of Big Data analytics products: ease of use, ease of implementation, and pricing. As legacy stack vendors enter the fray, we believe the past holds clues on how this market will evolve: Fast-growing newcomers in the previous generation of business intelligence companies created and shaped the market, but were eventually acquired by large stack vendors to fill gaps in their product portfolios. Although valuations in our Big Data coverage remain rich, we believe continued fundamental outperformance could lead to companies growing into their premium prices. Alternatively, the stack vendors may once again conclude that M&A is the easiest way to complete their product portfolios.

Norman Young does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.