MOUNTAIN VIEW, Calif. & AMSTERDAM, The Netherlands–(BUSINESS WIRE)–Elastic N.V. (NYSE: ESTC) (“Elastic”), the company behind Elasticsearch and the Elastic Stack, is excited to announce the general availability of Elastic App Search on Elasticsearch Service.
“Enabling App Search on Elastic Cloud will give Elastic customers the best possible experience, access to all of our features, and support from the source, in addition to the many benefits of being available at every location of our globally distributed cloud infrastructure.”
Just to clarify (since I found the press release not that informative), Elastic App Search gives you a user-interface and APIs that let you get search (eg: search for ecommerce products) going in your app quickly and easier than traditional (raw) ElasticSearch.
To contrast, ES is a data-store. Search functionality comes out of the box, but to make it workable needs well, work. If you want to tweak the results, support spelling mistakes, etc you’d need to change your ES query or indexes.
It also sets up analytics (so you can see how well the search is performing, queries that don’t return results so you can tweak, augment your dataset), and a UI for anyone to tweak the results, pin results to queries etc. So making adding search to your app/website really straightforward.
It’s pretty cool. As a way you’d use this (from my recent experience), we had to write code to create ElasticSearch queries that dealt with all the different real-estate filters you can imagine.
This is very developer-centric and is designed to just solve the search problem through a SaaS offering. It leverages the SwiftType acquisition.
The other key from the press release was the payment plan:
“With App Search on Elasticsearch Service, users only pay for the resources they consume, without worrying about artificial constraints around the number of users, documents, or operations made. It’s a whole new approach to pricing search that’s transparent and fair.”
I appreciate you chiming in here, Greg, and thanks for your post the other day.
Darth, thanks for your post the other day as well.
Unfortunately, I don’t follow a lot of what you guys have said about Elastic. Maybe you don’t realize, but you’re fluent in a language I’ll call “techie,” and others of us here can’t speak it any better than we can speak Japanese or Swahili. I hope you’ll continue to try to educate us, but I recommend using as little jargon as possible and keeping your posts short so we don’t get confused. I’m sorry, and I’m not trying to be lazy, but I do get pretty lost with long posts when I don’t understand the subject matter well.
I did like this part of the press release (Greg mentioned part of it as well): Elastic didn’t just make getting started on App Search easier — they’ve also simplified pricing by switching to the same resource-based pricing model that Elasticsearch Service uses. With App Search on Elasticsearch Service, users only pay for the resources they consume, without worrying about artificial constraints around the number of users, documents, or operations made. It’s a whole new approach to pricing search that’s transparent and fair.
I’m trying to understand if their pricing is idealistic, or simply transparent and fair like they say. I do think where they overlap with other companies like Datadog, it could be a long term threat to Datadog. Perhaps Datadog is going after larger customers than Elastic and never the twain shall meet (Greg, maybe that’s what you were saying?) but I think only time will tell. For now I’m happy with large positions in both DDOG and ESTC. I’ll probably continue to think that way as long as both are growing rapidly.
Appears this is only available in their proprietary version not the Open source version. From the news item:
Introducing a new free tier only available on the official Elasticsearch Service.
The complaint had always been that Amazon makes more money hosting Elastic OS version without paying a dime. The more the differentiation beyween the 2 the better for Elastic.
Gregg,
In the other thread you mentioned many ways you have used Elastic. Did you have to pay for it? When asked the company’s IR dept. has said in the past that for mission critical use cases companies pay Elastic. Elastic’s ultimate size depends a lot on the accuracy of that statement. I am curious if you considered you use case mission critical.
For now I continue to maintain a large Elastic position. Upcoming earnings will be interesting to see if Elastic’s price strategy is getting traction. Plus we may learn more about the Amazon lawsuit. After the June Q Elastic will give next full year guidance.
No one knows what the demand for their new pricing strategy will be relative to other situations. To date customers continue to pay a premium to use solutions like Datadog or Splunk. Certainly there are many examples of customers switching to Elastic from say Splunk (although not so many switching from Datadog that I am aware of - but I have not looked).
Meanwhile, as we saw in the Okta report, Splunk is doing superb. They may all be coexisting or Elastic’s pricing model, with its current product offerings, are not as disruptive as might be hoped. That can always change, and Elastic is so cheaply priced it would cause a nice boom for the share price, but the current results are what they are.
All of my experience has been with ElasticSearch version hosted on AWS. So we were paying for it, but Amazon not Elastic. Both decisions predated the Elastic SaaS version. Our use-cases were pretty mission-critical, but not the primary mission if that makes sense.
On reflection, would we use Elastics version now? Hmm. Both companies were heavily into AWS, so theres a “it’s really easy to use AWS version” tendency. On the other hand, AWS ElasticSearch was always lots of versions behind (with no real road map to when it would be upgraded), and didn’t give access to (hardly any) all of the tweaking options available in datastores. Their support is a bit ordinary too.
So on balance, we probably would have used Elastics version but “easiness” is a powerful argument.
I guess the thing to note after all this discussion ESTC is providing a datastore (similar to MDB) but also packaging up (a cheaper, probably less able) versions of DDOG, SPLK, NEWR, CRWD and MDB.
Ultimately, I think that price strategy and revenue growth are key to watch. My take is that the long tail of software development shops who are price-sensitive will keep ESTC growing strongly for some time.
cheers
Greg
Full disclosure: My ESTC position is about 6% (my largest positions are around 9%, cos I’m not Saul!)
I guess the thing to note after all this discussion ESTC is providing a datastore (similar to MDB) but also packaging up (a cheaper, probably less able) versions of DDOG, SPLK, NEWR, CRWD and MDB.
Now, that I understood. Thanks, Greg!
Ultimately, I think that price strategy and revenue growth are key to watch. My take is that the long tail of software development shops who are price-sensitive will keep ESTC growing strongly for some time.
I’m with you, holding strong at a 14%+ position. I know I said yesterday that ESTC could be a long term threat to DDOG (and SPLK and NEWR and CRWD etc), but really I think they could all be winners appealing to different segments of a rapidly growing market. Time will tell.
Also, if you haven’t listened to Patrick’s podcast you should peruse his list of other interviews. He invites smart people and asks smart questions. Highly interesting and informative material.
Brief summary of interview (copy/pasted from website) :Chetan Puttagunta is a general partner at Benchmark Capital and has a remarkable track record of investing in early stage software businesses, including several like Mulesoft, MongoDB, and Elastic that went on to be public companies.
Chetan has been my key guide for understanding the world of enterprise software as we at O’Shaughnessy Asset Management have built an investing platform called Canvas. His advice has been critical to our early success. In this episode we explore the history of software and software investing, and go into the details on how to build and grow new software businesses. We discuss product, sales and marketing, recruiting, scaling, and everything in between.
Please enjoy this great conversation with one of my favorite business and investing thinkers.
