Much of the signal in IBM's acquisition of Red Hat revolves around containers and application development, but don't forget the potential to make IBM the center of the commercial open source universe.
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IBM's $34 billion deal for Red Hat may have taken mere months to close, but the cultural journey it's kicking off will take a decade to realize. If that seems too long, in part it is, given the monumental industry changes in how IT is consumed. No vendor wants to get last place in that race.
It's also true that public cloud spending remains a Lilliputian percentage of overall IT spending, estimated by Gartner at $3.7 trillion in 2018. Enterprises desperately need help navigating their on-premises present with their cloud future. In this market, Red Hat/IBM has a real opportunity to win big.
Money can't buy me love
IBM, in somewhat of a free fall for years, needed to make a big bet. Locked out of the cloud wars and forced to peddle blockchain as a solution to who-knows-what, IBM threw its Hail Mary pass for Red Hat.
And what a pass it is.
No, Red Hat is not a top-three cloud vendor (none of which was for sale, anyway). In fact, some suggest that Red Hat looks a bit too staid to be transformative for IBM—more a lateral pass than a Hail Mary, as it were.
This, however, misses the point. That point is that centenarian IBM didn't need to buy youth so much as it needed to acquire a bridge for its customers to upgrade to cloud on their own terms. Pre-OpenShift Red Hat would not have fit this description, as it was stuck in the same OS/middleware time warp as IBM. But with OpenShift, Red Hat has the means to upgrade enterprises to a Kubernetes-fueled future, which is all about modern application development and deployment.
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As Redmonk analyst Stephen O'Grady has written: "Red Hat is a company with one foot in the old world of operating systems and Java application servers and the other in containers, Kubernetes and other potential growth opportunities like Ansible." This isn't to suggest that the path forward for Red Hat/IBM is therefore easy—it's not. O'Grady goes on: "[T]he major cloud providers are aggressively competing in the application platform space—even in the once safe on prem space now with Google's GKE—and in which they have advantages ranging from adjacent services to customer acquisition to preferential network treatment."
Even so, the deal does offer hope.
Tomorrow's modern boxes
That hope stems, in part, from the possibility that Red Hat will help IBM to "maximize [its] footprint off the public cloud while attempting to replicate the success of its classic middleware business on it," continuing with O'Grady's theme. Public cloud is absolutely the future, but that future is going to take a long, long time, and in the interim IBM/Red Hat will have a strong story to tell CIOs trying to modernize. Red Hat's OpenShift, in particular, gives IBM a play for multicloud workloads, or the opportunity to make sense of seemingly conflicting cloud directions. No enterprise is only buying one cloud. As such, OpenShift introduces a way to speak to these different workloads running on the different clouds, and manage them.
Nor is this all.
One other thing that the combined open source software giant can achieve, which no other company has tried: To become the center of gravity for an increasingly open source world. Almost ironically, Red Hat has never assumed this mantle. It should now.
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Rightly or wrongly (the latter, in my view), some in the open source ecosystem accuse the public clouds of sucking cash out of open source (whether corporate or community-driven). Red Hat/IBM, for its part, can offer the exact opposite: To make it easier for open source communities and companies to become thriving, self-sustaining entities. For the moment, this is Red Hat's battle to lose, but first it needs to make a concerted effort to give commercial open source companies a way to build their businesses with Red Hat.
Again, for years Red Hat has eschewed this role, even as it discussed it offline in private conversations (some of which I was privy to). Enterprise infrastructure is overwhelmingly going open source, and Red Hat/IBM should be there to help enterprises adopt it even as Red Hat helps vendors to profit therefrom.
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