Will the Red Hat acquisition propel IBM to cloud leadership?

July 15, 2019

Will the Red Hat acquisition propel IBM to cloud leadership?

The dust is settling. IBM now owns Red Hat. What will this mean for IBM’s ability to become a leader in the cloud market? Will market dynamics change with this acquisition or will things remain the same? Of course, no one knows precisely what will happen. But one thing is for certain – a majority of large corporations are still in the process of moving to the cloud so they is a lot at stake for IBM and its competitors. My take is that buying Red Hat was a shrewd move that could work brilliantly if IBM executes well. Here are my top five takeaways from the acquisition

Red Hat Adds Legitimacy to IBM’s Open Source Investments. IBM has had trouble convincing the market of its investments in open source over decades. Red Hat clearly is well respected for its contribution and ability to monetize open source. As cloud computing continues to mature, it is abundantly clear that open source and standards will drive the cloud market. I expect that IBM will put more marketing efforts emphasizing its focus on cloud open source that should resonate with customers that want to avoid lock in. Red Hat gives IBM the credentials and recognition it has long sought.

IBM’s industry expertise will enable Red Hat to expand its enterprise reach. IBM has invested significantly in both technical and business consulting services across the globe. Red Hat, as a much smaller company, has been limited its ability to service large companies. These global services will help Red Hat gain a global foothold. In addition, Red Hat has a large presence in the telecommunications market that will be good news for IBM.

OpenShift as the secret sauce.  Red Hat’s OpenShift is a Kubernetes container platform designed to automate and manage hybrid and multicloud deployments. It is evident that Kubernetes has emerged as the defacto standard for cloud development and deployment. Red Hat has done an excellent job executing its version of Kubernetes. I expect that IBM will transform its public and private cloud offerings based on OpenShift.

Expanding the Partner Ecosystem. Both IBM and Red Hat have extensive partnering programs. Both companies will benefit from the each other’s approach to partnering. IBM focus is on its channel and customer reach. Red Hat has a broad ecosystem of cloud vendors ranging from Microsoft to Amazon. Customers that want to hedge their bets and select from among cloud options may like IBM’s ability to offer a consistent set of cloud services across platforms.

Freedom with Collaboration. If IBM plays its cards right, it will keep Red Hat separate. However, the greatest benefits to IBM will be the technical cross-fertilization. For example, IBM has deep expertise in advanced data management and multicloud management that will benefit Red Hat. Likewise, Red Hat has deep technical expertise in cloud system management and automation.

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About Judith Hurwitz

Judith Hurwitz is an author, speaker and business technology consultant with decades of experience.