In this 2 part blog series I plan to cover some of my own perspectives on the Red Hat acquisition and what it means for IBM as we enter what Ginni oft calls Chapter 2 of the Cloud. In part 1 of this 2 part series, I plan to cover the IBM and Red Hat angle at a corporate level and in part 2 what the acquisition means for the mainframe and LinuxONE businesses.
The corporate press release says: The acquisition redefines the cloud market for business. Red Hat’s open hybrid cloud technologies are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise, and sales leadership in more than 175 countries. Together, IBM and Red Hat will accelerate innovation by offering a next-generation hybrid multi-cloud platform. Based on open source technologies, such as Linux and Kubernetes, the platform will allow businesses to securely deploy, run and manage data and applications on-premises and on private and multiple public clouds.
My take is that IBM and Red Hat truly do add up to a 2 + 2 = 5 type equation. Couple Red Hat products, community and track record of innovation with IBM’s reach, partner network and client access and you have a path to growth for both companies
IBM Red Hat
The CEO’s of both companies are obviously jazzed about the acquisition:
“Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors,” said Ginni Rometty, IBM chairman, president and CEO. “They need open, flexible technology to manage these hybrid multicloud environments. And they need partners they can trust to manage and secure these systems. IBM and Red Hat are uniquely suited to meet these needs. As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come.”
“When we talk to customers, their challenges are clear: They need to move faster and differentiate through technology. They want to build more collaborative cultures, and they need solutions that give them the flexibility to build and deploy any app or workload, anywhere,” said Jim Whitehurst, president and CEO, Red Hat. “We think open source has become the de facto standard in technology because it enables these solutions. Joining forces with IBM gives Red Hat the opportunity to bring more open source innovation to an even broader range of organizations and will enable us to scale to meet the need for hybrid cloud solutions that deliver true choice and agility.”
I have seen Ginni and Jim on a couple of occasions together now, both on TV and live at Red Hat Summit and they genuinely finish each other’s sentences and look very comfortable with each other. They obviously have chemistry.
So where is the meat in the acquisition? The press release gives the insight here, its all about Hybrid multi-cloud:
The Hybrid Cloud Opportunity
IBM’s cloud revenue has grown from 4 percent of total revenue in 2013 to 25 percent today. This growth comes through a comprehensive range of as-a-service offerings and software, services and hardware that enable IBM to advise, build, move and manage cloud solutions across public, private and on-premises environments for customers. IBM cloud revenue for the 12-month period through the first quarter of this year grew to over $19 billion. The Red Hat acquisition is expected to contribute approximately two points of compound annual revenue growth to IBM over a five-year period.
Digital reinvention is at an inflection point as businesses enter the next chapter of their cloud journey. Most enterprises today are approximately 20 percent into their transition to the cloud. In this first chapter of their cloud journey, businesses made great strides in reducing costs, boosting productivity and revitalizing their customer-facing innovation programs. Chapter two, however, is about shifting mission-critical workloads to the cloud and optimizing everything from supply chains to core banking systems.
The IBM take on the opportunity is that o succeed in the next chapter of the cloud, businesses need to manage their entire IT infrastructure, on and off-premises and across different clouds – private and public – in a way that is simple, consistent and integrated. Businesses are seeking one common environment they can build once and deploy in any one of the appropriate footprints to be faster and more agile. IBM’s offerings have evolved to reflect new customer needs and drive greater growth. The acquisition of Red Hat further strengthens IBM as the leader in hybrid cloud for the enterprise.
“As organizations seek to increase their pace of innovation to stay competitive, they are looking to open source and a distributed cloud environment to enable a new wave of digital innovation that wasn’t possible before. Over the next five years, IDC expects enterprises to invest heavily in their journeys to the cloud, and innovation on it. A large and increasing portion of this investment will be on open hybrid and multicloud environments that enable them to move apps, data and workloads across different environments,” said Frank Gens, Senior Vice President and Chief Analyst, IDC. “With the acquisition of Red Hat, and IBM’s commitment to Red Hat’s independence, IBM is well positioned to help enterprises differentiate themselves in their industry by capitalizing on open source in this emerging hybrid and multicloud world.”
The collective ability of IBM and Red Hat to unlock the true value of hybrid cloud for businesses is already resonating among customers moving to the next chapter of digital reinvention. I see this every day as I talk to clients, so IBM’s press team have this right…
IBM Reinforces Commitment to Open Source and Red Hat Neutrality
IBM and Red Hat have deep open source values and experience. The two companies have worked together for more than 20 years to make open source the default choice for modern IT solutions. This includes the importance of open governance and helping open source projects and communities flourish through continued contribution.
With Red Hat, IBM has acquired one of the most important software companies in the IT industry. Red Hat’s pioneering business model helped bring open source – including technologies like Linux, Kubernetes, Ansible, Java, Ceph and many more – into the mainstream for enterprises. Today, Linux is the most used platform for development. Red Hat Enterprise Linux alone is expected to contribute to more than $10 trillion worth of global business revenues in 2019. By 2023, an additional 640,000 people are expected to work in Red Hat-related jobs.
IBM has committed to scaling and accelerating open source and hybrid cloud for businesses across industries, as well as preserving the independence and neutrality of Red Hat’s open source heritage. This includes its open source community leadership, contributions and development model; product portfolio, services, and go-to-market strategy; robust developer and partner ecosystems, and unique culture.
My take on day 2 of the acquisition is that the internal comms has been well handled, the enablement of the sales force has been solidly executed and the excitement is palpable about what lies ahead as we jointly enter chapter 2 of our clients journey to hybrid multi-cloud with a combined IBM and Red Hat portfolio to address their requirements.
Check back in a couple of weeks time for part 2 of this blog series when I will explore the impact on the mainframe and LinuxONE business and what we can expect with the addition of Red Hat.