IBM and Red Hat – betting the farm on hybrid cloud

Des Trundle 17th July 2019

In the largest software acquisition of all time, IBM has completed the purchase of Red Hat for a staggering

The drive behind this join up was to create a hybrid cloud company that would support the much slower march of enterprise businesses into the computing modern era, bringing the cloud to the Data Centre instead of the All-In approach traditionally favoured by the likes of Amazon. Having a singular IT environment that spans not only an organisation’s on-premise data centres but multiple public cloud providers too is growing in popularity.

The recent “Enterprise Cloud Index” report by Nutanix shows that 91% of companies believe that hybrid cloud is the ideal IT model with 41% of organisations adopting hybrid cloud within 2 years (up from 18% today). This 23% shift dwarfs the plans to adopt just public cloud offerings.

Indeed, since IBM announced their plans for Red Hat, both AWS (AWS Outposts) and Google Cloud Platform (GKE On-Prem) have release on-premise offerings. Together, with the forward thinking Microsoft Azure Stack, it’s clear where the new battle ground has shifted to.

So what does a combined IBM and Red Hat have in their kitbag to differentiate themselves? How can they grab their share of this $1T dollar hybrid market while they have been flagging at the bottom end of the public cloud market?

Experience turning open source into commercial success

The whole Red Hat business model was built on adding premium value to open source projects and making them worth paying for, all without losing the open source community involvement. The majority of Red Hat’s cloud solutions were open source projects, with Red Hat being one of the largest contributors. All the products were field tested by the community at large, gaining share and traction, before being commercialised by Red Hat.

Synergy between cloud platforms

IBM Cloud is built upon Softlayer (which IBM purchased in 2013) while Red Hat brings OpenStack to the party. IBM has already demonstrated these can interoperate in the public cloud while Red Hat has success in deploying OpenStack inside corporate data centres. Together, IBM has a proven hybrid model with extensive management capability.

Enterprise trust

Both IBM and Red Hat dominate server distributions within enterprise organisations, z/OS, AIX, and Red Hat. Both companies also have a track record with management and integration solutions such as WebSphere and JBOSS, so enterprises are used to dealing and integrating IBM and Red Hat products into the estate.

Only time will tell if IBM made the right choice betting the farm on hybrid cloud but this deal will shake up what was becoming a two horse race within cloud.


You can read the official IBM and Red Hat press release here.

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