AT&T & IBM Strike Major Cloud, Networking Alliance

Mitch Wagner
7/16/2019
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AT&T and IBM launched a "multi-year strategic alliance" Tuesday, where IBM will provide cloud resources and Red Hat's Kubernetes platform to support AT&T Business applications, while the giant US operator will help bring software-defined networking to IBM.

AT&T will use Red Hat Enterprise Linux and OpenShift for managing Kubernetes containerized workloads, to better serve enterprise customers, the companies said in a news release Tuesday. IBM acquired Red Hat in a $34 billion deal that closed last week.

"IBM will be the primary developer and cloud provider for AT&T Business's operational applications," the companies said in a statement. IBM will "help manage the AT&T Communications IT infrastructure, on and off-premises and across different clouds --private and public,"

For its part, AT&T Business will help transform IBM's networking solutions with its 5G, edge computing, Internet of Things and multicloud capabilities.

The deal builds on a 20-year relationship between the two companies: AT&T Business is IBM's strategic global networking provider.

The companies will also collaborate on the development of edge compute platforms that, in theory, will help enterprise customers in verticals such as retail, financial services, transportation, manufacturing and healthcare make the most of cloud and high-speed, low-latency networking capabilities.

This isn't IBM's first telco dance this year. In January, IBM struck a major deal with Vodafone to provide European enterprises with access to cloud and networking services. The relationship includes a $550 million eight-year outsourcing deal for Vodafone to hand over management and deployment of its cloud and hosting business to IBM.

As a follow-up to the European Vodafone deal, IBM struck a deal in May with Vodafone Idea to improve customer experience for the Indian service provider.

Open source and the cloud are fundamental technologies for AT&T's 5G and other network evolution. AT&T has virtualized 65% of its core network during the past five years and is on track to meet its goal of virtualizing 75% of network functions by next year, Roman Paciewicz, AT&T Business's chief product officer, told Light Reading in March. AT&T sees the cloud "fragmenting," with some workloads pushed out to the edge, at customer premises and in the network, Paciewicz said. AT&T sees big opportunities in that fragmentation, to become the edge provider, enabled by 5G.

AT&T isn't dating IBM exclusively.

The carrier signed an "eight-figure" Kubernetes and OpenStack deal with Mirantis, for AT&T's 5G network. Mirantis announced the deal in February. For that deal, AT&T is deploying Kubernetes and OpenStack on-premises rather than in a public cloud, for thousands of nodes.

AT&T announced a partnership with Microsoft in February to test deploying Microsoft Azure compute capabilities at the edge of AT&T's 5G network.

For IBM, the deal is a nice follow-up to its Red Hat acquisition. IBM and Red Hat executives said on conference calls with analysts and journalists last week that the two companies have a history of partnering on deals, and that cooperation will continue now that they're one company. Red Hat revenues were up in its most recent quarter, signaling customer confidence in the deal, said Paul Cormier, Red Hat's president of product and technologies. Revenue was $935 million, up 15% year-over-year. The AT&T deal provides further validation, and just a few days later too.

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— Mitch Wagner Visit my LinkedIn profileFollow me on TwitterJoin my Facebook GroupRead my blog: Things Mitch Wagner Saw Executive Editor, Light Reading

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