Palantir's Apollo, the Trojan Horse
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Editor: @Emanuele20x
The freemium Trojan Horse
Palantir has often been criticized for not having a “freemium” product, which would facilitate sales towards IT departments.
However, the freemium solution is already in front of us!
The recent update of the website shows Apollo as the “freemium” product we have been waiting for. It also fills the consumption-based pricing gap (PLTR copies SNOW’s Pricing Model).
Apollo has been officially commercialized since April, but the website is now reporting its pricing:
Apollo SDK = Free;
Apollo Core = $100/installation per month. One installation is an instance (update) of a service installed in one environment. As an example, if a company wants to install the same update into 3 environments (AWS, Azure, on-premise) Apollo would charge $300.
Therefore the key drivers of Apollo’s monetization are:
the exponential growth in potential updates that clients can deploy: by becoming more efficient in developing and deploying instances, more updates can be sent;
the increasing number of environments a client needs to operate into as regulation encourages companies to “diversify” the operating risks.
Apollo could revolutionize the course of Palantir’s growth in the long run. To appreciate its strength, we should take one step back and uncover what Apollo is.
Apollo: the brain behind Foundry and Gotham
Software drives enterprise success to a point where we can almost say that “all companies are software companies.”
Software is no longer a nice accessory for companies.
However, creating software is difficult. Delivering and managing software at scale in an efficient manner, the so-called “software supply chain,” is even more difficult, yet existential.
Apollo helps companies manage their software supply chain.
When Palantir was born, the Cloud sector was still in its infancy. Its government clients were only running Gotham “on-premise,” on their own servers. This meant manual installations and updates. Therefore, software deployment was slow and very “labor intensive”. This was a major reason why Palantir’s contribution margins were initially low (PLTR: This Time It’s Different).
Apollo was built initially to help Palantir build and maintain its Foundry platform towards a Cloud SaaS offering. Now Apollo is the brain that helps Palantir deliver Foundry and Gotham updates in all the environments, from the public clouds; AWS, Azure, Google Cloud, to the back of Humvees (military Jeeps) or even satellites.
Apollo currently supports the deployment on +300 unique environments.
In particular, Apollo allows to:
Delete Environment constraints: Apollo helps diversify between Cloud providers, operate in heavily regulated environments and even software to the edge, like satellites (PLTR’s $140bn to Monopolize Space). With Apollo, developers can write code once that works for each environment. Given the pricing structure, where Palantir charges for each installation in each environment, Palantir is set to benefit enormously from the Multicloud and Hybrid Cloud (cloud + on-premise) adoption.
Perform Continuous Delivery: updates are sent regularly without service interruption. This way, the service is up 24/7.
Monitor code infrastructure from a single pane of glass: Apollo helps users understand the current health of the code infrastructure. New features can easily deploy in a safe way and react to anomalies in a timely manner. This is crucial to monitor security and compliance with regulations, like the GDPR data protection law in Europe.
These features translate into strong benefits. According to Palantir’s website:
“Apollo can help speed up the release of products by over 25X and cut DevSecOps costs by 50%. As a result, developers can focus on what they do best: building great software.”
Since using Apollo, Palantir has benefitted from:
45x better deployment frequency on Foundry and Gotham: from 8,000 deploys per month to 360,000+ deploys per month;
12,500x improvement in lead time: the time to see changes effectively deployed moved from 1 month to 3.5 minutes;
4.9 minutes to Restore Palantir (“rollback”) on a previous version automatically and safely. This task used to take numerous hours;
95.5% success rate in Change in Failure Rate: Apollo ensures that changes to production are deployed only after passing rigorous tests, including success criteria defined by developers, operators, and security teams, as well as code testing (canary testing and blue/green rollouts).
By commercializing this solution, Palantir aims to provide its clients the same efficiency in building and delivering software it has.
Apollo is AWS 2.0
Palantir compares Apollo to AWS because it was born internally by Amazon to solve Amazon’s problem to have a stable infrastructure on Prime days when the traffic volume spikes and the infrastructure needed to be elastic to manage it. Since then AWS has become the key profit driver for Amazon.
Apollo was born for Palantir’s need of being efficient in distributing its software to the most fragmented environments.
AWS pioneered the Cloud industry. In the same way, Apollo seeks to bring the cloud to a new dimension called “Cloud 2.0”, which involves Edge, MultiCloud, Multi-Layered Security and Privacy.
Palantir’s Trojan Horse
As mentioned, Apollo’s offering is composed of two major modules:
Apollo Software Development Kit (SDK): the free version;
Apollo Core: the consumption-based product.
In detail, Apollo SDK helps:
Reduce time to market of deployment;
Decrease the cost of DevOps, meaning fewer engineers are needed to generate the same output;
Scale code with Apollo CD (inside the Apollo Core paid module) with a “touch of a button.”
Essentially, Apollo SDK is the programming environment that helps developers write code. To keep implementing updates in a continuous way, clients can switch to the paid features.
By using Apollo SDK engineers can only focus on building code that adds value. Therefore, engineers don’t need to become experts on:
infrastructure;
security;
compliance.
This translates into huge efficiency gains for developers.
Apollo Core
This is the key offering which consists of 3 components:
Dependency Management Engine: helps define how software should be deployed, under which environment, constraints and security levels;
Apollo Continuous Deployment (“CD”): this is the core “orchestration engine” that allows the continuous deployment of new features with different rollout strategies (eg. canary environments), and rollback to a previous version in the case where instability emerges. Meanwhile, Apollo ensures that the full audit of the release is available so that it can ensure the constraints set by the security and compliance teams are respected.
Day 2 Operations: ensure the quality of the software and check vulnerabilities. With Apollo, all teams understand what software is running, where, and whether it is healthy, secure and available. Apollo ensures platforms stay up-to-date and operational 24/7.
This product is the “Nirvana for IT.”
Developers are frustrated from spending time on infrastructure code rather than valuable code. The resulting burden contributes to delivering solutions that don’t work, as ~80% of the internal software solutions fail to deliver the expected results.
Below you could find Codestrap’s interview with Greg DeArment, Apollo's Chief Architect.
Currently IT departments are the biggest competitors for Palantir Foundry. For years they tried to develop internal solutions which turned into “Frankenstein monsters” that often don’t work. Therefore, if Palantir can solve the pain of IT departments with Apollo, they would also be more prone to adopt Foundry.
This would also facilitate the building of a developer community, which is essential to reach mass and growth in the likes of Snowflake and Salesforce.
Who uses Apollo?
Apollo is currently deployed by its biggest customers, like Airbus, BP and the US Army.
Apollo does not only empower established organizations. A recent whitepaper published in August highlights that Apollo is also ready to be commercialized to the Builders. Builders currently represent ~20 early-stage startups built by former Palantir employees that have been chosen for Foundry for Builders.
In addition, Sarcos, one of the SPACs Palantir invested in (Are PLTR’s SPACs a Scam?), uses Apollo to manage its robot fleet on a scale and distribute updates on it instantly.
Apollo’s potential Total Addressable Market is simply immense.
Apollo is ready to be deployed to any company or government organization that needs to write code regardless of its size.
Conclusion
The commercialization of Apollo is one of the most important Palantir milestones.
Unfortunately, due to the complexity of the product and its target of IT professionals, it has been underrated. I don’t expect Wall Street to appreciate it until it delivers a clear contribution to Palantir’s numbers.
Apollo is set to be the key enabler in acquiring new customers thanks to its freemium model and being appreciated by IT departments.
This would create network effects within a company (PLTR: The Biggest Networks Start Small) and help Foundry be adopted across the enterprise. Thanks to its security controls, Apollo has been a key driver of the recent IL6 accreditation.
This is only a hint of the importance that providing a secure and effective software supply chain will have in the coming years as regulation will become stricter. This would inevitably increase the need for solutions like Apollo.
It is unlikely Palantir provides full numbers on Apollo until it would become a key driver of growth. For reference, Amazon started disclosing AWS numbers only in 2015 when it reached ~$5bn in Revenues.
Since Apollo relates to software deployment, which is an existential problem affecting any modern organization, its potential is “essentially unlimited.”
“While most companies are content with addressing the idiosyncratic needs and inefficiencies of select customers in a subset of industries, the market we seek to address, particularly among the world’s commercial enterprises, is essentially unlimited.” - Alex Karp, Palantir CEO
Yours,
Arny
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View expresses are my own and do not represent Financial Advice in any way.
I own (many) PLTR stocks.
great coverage on the Apollo product/environment, thank you!