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Intel's Cloudera Investment Won't Solve Its Cloud Quandary

NEW YORK (TheStreet) -- Intel's (INTC - Get Report) investment in Cloudera marks a big day for open-source computing.

A few years ago I was honored to keynote an ApacheCon in Atlanta, and the prize was interviewing Doug Cutting, incoming chairman of the Apache Software Foundation, which organizes and boosts open-source software. Open-source software is freely available. It can be fixed or upgraded by anyone who downloads it.

Cutting had previously created Hadoop, named for his son's stuffed elephant. Hadoop breaks down big math problems into a collection of smaller problems, then passes them around and collates the answers. Cutting told me it's like a news editor handing out and collecting assignments. Such "big data" solutions are at the heart of what clouds do well.

Cutting had also joined Cloudera as chief architect, with the aim of commercializing Hadoop, creating a version with professional support. But open source remains at the heart of the operation.

When we talked, in the fall of 2010, there was still a question about whether open source could make money, and whether big companies such as Intel would ever understand that software needs to be free in order to grow.

By paying an estimated $740 million to $760 million for 18% of Cloudera, much of which is going to existing shareholders, Intel has answered that question in the affirmative.

The deal offers more evidence, as though any were needed, that big tech companies see open source as the only way to stay relevant in cloud computing.

Hewlett-Packard (HPQ) and IBM (IBM) have both committed to open-source OpenStack for their cloud infrastructure. VMware (VMW) recently placed the code for its Cloud Foundry platform into an open-source foundation.

The problem is that, when it comes to cloud, big tech remains at the bottom of the profit stack.

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