IBM to Take on Competitors With Its Hybrid Cloud Strategy

IBM has a new strategy to compete with Amazon, Microsoft, Google and Alibaba in cloud computing: it spent $34 billion to acquire Red Hat, which specializes in open source software tools to write cloud computing applications. Red Hat already has partnerships with all the major cloud providers. IBM, a latecomer to this highly competitive sector, is presenting itself as a neutral party to those concerned about becoming too dependent on a single player. For this reason, Germany also has plans to build its own cloud infrastructure.

The New York Times reports, “the IBM-Red Hat proposition is that it will offer a layer of software that sits atop the big clouds, and works with them all.” “Write once, run anywhere,” said Red Hat chief executive James Whitehurst, who noted the company will maintain and expand existing partnerships.

NYT points out this is “exactly the same pitch made in the 1990s for the Java programming language and platform, developed by Sun Microsystems,” when the general fear was being locked into Microsoft’s PC technology. Whitehurst alluded to that when he described the IBM-Red Hat alliance as another option to “three incompatible walled gardens.”

According to IBM chief executive Ginni Rometty, the company sees its future in “hybrid multi-cloud,” which will enable its business clients to move to the cloud in a flexible, less expensive manner. Noting that 80 percent of the corporate arena still hasn’t transitioned to the cloud, Rometty said this strategy is similar to “renovating a house,” where “you build on what you have rather than ripping and replacing everything.”

According to Whitehurst, IBM has pledged to keep Red Hat’s management team intact and maintain its Raleigh, North Carolina headquarters, brands, and business model. Last year, Red Hat made $3.4 billion in revenue, representing 15 percent growth.

Bloomberg reports that “German economics minister Peter Altmaier stated plans to build up a German cloud service to allow European companies to store data independent of Asian or U.S. rivals such as Amazon.” He dubbed it Germany’s “right to technological sovereignty.” “Data clouds should not only be set up in the U.S. or China, but also in Germany so that European companies, which want secure and reliable data storage, have this option,” he said.

Altmaier is looking for partners and is in talks with SAP SE, Deutsche Telekom and other companies. Deutsche Telekom previously marketed its own cloud, but “at the end of 2018 began offering access to Amazon’s data centers in a recognition of its longtime rival’s dominance in Europe.”