IBM: Don't Panic! We Won't Mess With Red Hat

Alan Breznick
10/29/2018

Seeking to reassure investors, enterprise customers and the open-source community in general that nothing will change at Red Hat, senior IBM and Red Hat executives vowed today that Red Hat will continue to act independently even after Big Blue takes it over.

Speaking on a late-morning conference call, Arvind Krishna, senior vice president of Hybrid Cloud at IBM Corp. (NYSE: IBM), and Paul Cormier, executive vice president and president of Products and Technologies at Red Hat, swore up and down that Red Hat will operate as a distinct, independent unit within IBM's Hybrid Cloud business with the same freedom and flexibility that it enjoys today as its own company. They insisted that Red Hat will not change its focus, direction or management one bit after IBM closes the $34 billion deal, announced Sunday. (See IBM Buying Red Hat for $34B, Turning Cloud Upside Down and Is IBM Overpaying for Red Hat?)

"The day after we close, I don't intend to do anything differently," Cormier declared. "For us, it's business as usual."

Krishna seconded the notion. "I have no intention of interfering with Paul and Jim [Red Hat CEO Jim Whitehurst] on their roadmap," he said. "There is no value-add in trying to change that."

Cormier said the biggest change for Red Hat is that it will gain much greater customer reach through IBM's sales channels in 170 countries around the world. "We're still a relatively small company," he said. As things stand now, he noted, "we can't ramp up to the fill potential of that [customer] demand."

Calling the deal a "game-changer," Krishna all but promised that IBM will never drop the Red Hat name. "So Red Hat as a brand is going to keep going for as long as I can foresee," he said. He also said he "sees no reason" for any of Red Hat's locations to change.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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macemoneta
macemoneta
10/29/2018 | 5:32:53 PM
Then what's the point?
If nothing is going to change and Red Hat will continue to operate independently, what's the point of dropping $34B to acquire the company? It will take a decade or two to break even on the cost of the aquisition, if IBM isn't going to derive some more immediate value. And doing that will require getting Red Hat to change its focus; for example to target the DoD JEDI contract. So saying "nothing is going to change" is somewhat disingenuous if resources are going to be redirected. 
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