IBM business partners mull benefits, risks of Red Hat buyout

The success of the $34 billion Red Hat buyout would rely on Big Blue's handling of the open source software vendor's portfolio and culture, according to IBM business partners.

IBM business partners have begun recalibrating strategies in the wake of the vendor's announcement that it would acquire open source software vendor Red Hat.

IBM, which plans to purchase Red Hat for $34 billion, sparked a wildfire of questions this week concerning the fate of Red Hat's roadmap and commitment to open source culture under Big Blue. While IBM stated that Red Hat would operate independently within its hybrid cloud business unit, and retain its multi-cloud alliances with providers such as AWS, Microsoft and Google, overlaps in the vendors' portfolios and the nuances around integrating the companies have yet to be fleshed out. Despite the uncertainties, IBM business partners revealed they are optimistic and recognize the major boost the buyout would give Big Blue in the hybrid cloud market.

"IBM did some analysis, and they believe 80% of ... the enterprise workloads have not moved to any type of cloud platform for many reasons," said Charles Fullwood, senior director of software sales engineering at Force 3, a solution provider and IBM and Red Hat partner based in Crofton, Md. "IBM also believes that the hybrid cloud market is about a $1 trillion market by the year 2020" and the Linux operating system "is the dominant platform across the entire cloud marketplace."

Todd Matters, co-founder and chief architect of RackWare, a cloud migration platform provider based in Fremont, Calif., agreed. "IBM's growth has stalled in recent years, but this acquisition could help jump-start the company's growth by giving IBM a chunk of the burgeoning hybrid cloud market, driven by enterprises that are switching to multi-cloud and hybrid cloud strategies," he said in an email.

Broaden opportunities for IBM business partners

Fullwood said the IBM-Red Hat combo presents a "tremendous opportunity" in the federal space, which Force 3 targets, and beyond.

"The appeal of Red Hat is very broad," he said. He added that the acquisition would benefit Force 3's federal cloud migration offering, dubbed 'Bridge to the Cloud,' due in part to customer interest in the OpenShift container application platform, he said.

Tim Beerman, CTO of Ensono, a hybrid IT provider and IBM and Red Hat partner headquartered in Downers Grove, Ill., said he expects IBM will make significant investment to speed up Red Hat's research and development and technology roadmaps.

"We have large relationships with both [vendors] across the entire hybrid IT spectrum. I think where IBM takes the Red Hat capabilities and brings some of those capabilities into other IBM services, that will be interesting," Beerman said. "I am really interested to see the investment IBM is going to presumably pour into Red Hat to move IBM's hybrid story faster but also to move Red Hat's capabilities further along quickly, too, so we can leverage those."

A new public cloud platform?

Fullwood of Force 3 said he believes the IBM-Red Hat acquisition poses a potential disruptive opportunity in the public cloud market, where IBM lags behind AWS, Microsoft Azure and Google Cloud.

Using Red Hat technology, IBM could "create a new public cloud platform that is open and is contributed to by the open source community," he said. "If you think of AWS, they develop their cloud services and they are somewhat proprietary. If you look at Microsoft Azure, even though they are becoming more open, they are still somewhat proprietary. If IBM were to create a new public cloud infrastructure ... based on a combination of Red Hat and IBM [technology], it truly would be open and it would not lock customers in, and there would be more comfort in going onto the platform."

Maintaining Red Hat's independence

If the Red Hat acquisition is completed, IBM business partners acknowledged the risk of IBM compromising Red Hat's open source ethos.

I don't see major risk for IBM other than ensuring that they don't hinder what Red Hat has brought to them.
Tim BeermanCTO, Ensono

Fullwood said he doesn't expect IBM to interfere with Red Hat's culture or strategy. Citing previous acquisitions of Lotus, Rational and Tivoli, Fullwood noted that while the vendor typically integrates acquisitions into "the IBM machine," assimilating Red Hat like previous buyouts would "be a big culture shock to Red Hat employees" and could create problems.

"If the two companies collaborate ... and try to work together, it can be a very powerful acquisition," he said.

Beerman, meanwhile, said he equates the buyout to EMC's acquisition of VMware. "It is like a great acquisition, but VMware still had its own independence. They still had a lot of their partnerships [with EMC's competitors]." He said he predicts IBM to take a similar approach: Integrate very seamlessly with Red Hat's products, while maintaining the company's vendor-agnostic approach to the market.

"I don't see major risk for IBM other than ensuring that they don't hinder what Red Hat has brought to them," Beerman said.

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