International Business Machines Corp.’s recent acquisition of Red Hat Inc. is aimed squarely at building up its cloud business—in part by making it easier for IBM customers to use competing cloud services.
Red Hat’s open-source software enables chief information officers and other enterprise IT managers to run applications both within their own data centers and across a range of third-party providers, from IBM’s own cloud to Amazon.com Inc. ’s AWS, Microsoft Corp ’s Azure, or any other tech company that rents computer software and systems to businesses online.
“Public clouds are a big partner of ours,” says Red Hat Chief Executive Jim Whitehurst, “but they are basically saying ‘Come into my world and use all of my stuff.’”
Mr. Whitehurst says the ability to shift business applications between different cloud providers—known as a hybrid cloud strategy—is proving popular with CIOs as a way to minimize the risk of relying on a single tech service to handle a company’s entire information-technology system.
It also lets them shop around for a wider mix of cloud-based tools and emerging capabilities spread across an increasingly competitive market, Mr. Whitehurst says.
Revenue from IBM’s cloud business climbed 5% year-over-year in the second quarter, even as the tech giant posted its fourth straight quarter of declining revenue overall, but it remains far behind the pace of revenue growth set by Amazon and Microsoft.
IBM’s $34 billion deal to buy Red Hat, which closed in July, seeks to boost its standing in the market by drawing more businesses to hybrid cloud strategies.
Mr. Whitehurst spoke with CIO Journal on Tuesday about Red Hat’s role in that strategy, along with its place within IBM. Edited excerpts are below:
Some industry analysts worry about Red Hat’s independence under IBM. How is that working relationship shaking out?
I think the reason a lot of acquisitions fail is that there’s a reason somebody wants to sell. Generally, the reason they want to sell probably doesn’t mean they think there’s this wonderful, rosy future. Our view is that we’re at the beginning of a fundamental change in how technology is going to be built and consumed that is driven by open source.
Could we do it by ourselves? Maybe. But I think we thought the probability was small and being part of a bigger company was something we really wanted. Speaking for the senior team at Red Hat, we’re all still in and driving this. I think we have a real opportunity.
How is the cultural fit?
I’m the only dual-badged employee and that is absolutely intentional. We are a separate stand-alone subsidiary. This is two cultures working together, not coming together. There is a clear recognition from both organizations that we have very strong cultures and very different ways of operating that generate different capabilities.
The great news is that those capabilities are highly complementary. Typically if you jam things together you get the worst of both, not the best of both. And so we try to be really clear that we are separate companies. Let’s recognize the power of the other model and let’s work together.
Why is hybrid cloud compelling to CIOs and how does Red Hat help achieve it?
Not only does it reduce costs, it allows for a greater pace of innovation to occur, because you’re not hamstrung by all these incompatible vertical stacks. While there are other people talking about it, we are the only ones to deliver a hybrid platform.
This is why IBM bought us. OpenShift, which is our container platform, is the only way to have a consistent container platform that runs on any of the major clouds. You write code once and you can run it anywhere. That’s what’s compelling. I can innovate faster and protect myself from being locked in.
How does all this foster innovation?
The beauty of the Red Hat model is we get to sit and observe and dip our toe into a whole set of technologies and see what emerges. The majority of innovation is happening in open source, without a doubt. When something emerges as the next big thing, we’re just already more deeply into that.
Writing software and giving it away is a really bad business model. That is not what we do. We get involved in existing open-source communities and then we help commercialize and make it consumable. Open source is user-driven innovation. It’s users that have an issue and they solve that issue themselves. Big data emerged not because someone sat back and said we need a way to access data at scale. It was iterative issues that Facebook had, and Google had, and Yahoo had, and slowly built over time.