Microsoft Buys Revolution Analytics

On Friday, January 23, Microsoft announced an agreement to acquire Revolution Analytics.  Coverage of the announcement in the media is extensive, with stories by TechCrunch, Wired, ZDNet, VentureBeat and many others (here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here and here.)

Microsoft did not disclose the negotiated purchase price; Revolution’s total capitalization is around $40 million.  Given Revolution’s scale of operations, the acquisition will have minimal impact on Microsoft’s near-term revenue and profit.

Many analysts follow Microsoft, but few have heard of Revolution Analytics, and most seem to be stumped by this move.  An example:

Question: What is the significance of Microsoft acquiring Revolution Analytics?

Answer: I am not sure.

Microsoft gets four things with this deal:

• Instant credibility with the growing open source analytics community
• Consulting and support skills to help enterprise customers adopt R
• A capable engineering organization (conveniently located in Seattle)
• Software bits that should integrate well with the Microsoft stack

In addition to its primary offering, Revolution R Enterprise, Revolution distributes Revolution R Open, an enhanced free distribution of open source R; and Revolution R Cloud an elastic offering on the AWS Marketplace.  Revolution R Open is equivalent in many respects to Oracle R Distribution, which is also compiled with the Intel Math Kernel Libraries.  Revolution R Plus is commercially supported, and includes additional software bits for enterprise integration; this product is comparable to Oracle R Enterprise.

Revolution Analytics’ other key software assets include ScaleR, a distributed out-of-memory back end with a strong R interface; DeployR, a component that supports enterprise deployment of web-based applications; and DevelopR, a Windows-based IDE.

While the IDE has a number of useful features, it requires significant investment to compete effectively with RStudio, which has won the hearts and minds of R users.  Upgrading software simply to make it competitive with a “free” competitor strikes me as a dubious commercial move; it seems more likely that Microsoft will add an R capability to the Visual Studio suite.

Revolution’s ScaleR back end enables R users to leverage a platform for distributed analytics.  ScaleR already runs on Windows Server HPC clusters, which should make integration with Azure a straightforward matter.  This is important for Microsoft, since Azure Machine Learning currently maxes out at around 10Gb.

ScaleR’s integration with Hadoop currently runs through MapReduce; competing best-in-class Hadoop analytics (such as Spark, H2O, Skytree and SAS) run in memory for better performance.  Microsoft’s deep pockets give Revolution the means to make this product competitive.