“IBM’s acquisition of Red Hat is a signal that we are entering the next phase of the cloud battle”

In a surprising turn of events, tech giant IBM acquired Red Hat to the tune of $34 billion. According to the press release, the “most significant tech acquisition of 2018 will unlock true value of cloud for businesses”.

A second pressing issue is: how do we feel about large tech behemoths acquiring open source companies? Before we dive deeper into this topic, we invite you to participate in this poll.

Note: There is a poll embedded within this post, please visit the site to participate in this post’s poll.

JAXenter: What impact will the acquisition have on the open source ecosystem?

Karthik Ramasamy: Yet another data point validating the critical role that open source plays in modern IT infrastructure and IT business. This acquisition, in particular, the size of it, breathes new life into the open source ecosystem because of that validation. However, at the same time, it does add a note of caution—to date, IBM has been largely a huge contributor to open source without entering the business of open source in a significant way.

This acquisition represents a new phase for IBM, in which the open source ecosystem will tread carefully to see whether IBM continues to be a broad-based contributor to open source or narrows its focus to open source projects directly tied to its own offerings.

JAXenter: What impact does the acquisition have on Streamlio and other open source-focused startups?

The acquisition makes clear that the window for additional public cloud platforms to gain traction has passed completely.

Karthik Ramasamy: The demonstration of the value of an open source business will lead to increased activity and investment in startups (like Streamlio) that are driving forward new areas for growth of open source adoption, especially in areas such as data processing and data analytics where open source adoption still is in its early stages.

JAXenter: Will this damage or help the multi-cloud trend?

Karthik Ramasamy: This acquisition is a signal that we are entering the next phase of the cloud battle. It makes clear that the window for additional public cloud platforms to gain traction has passed completely—the winners have been decided, and even companies with the resources of IBM are unable to enter the game and succeed in building a successful public cloud platform offering.

The new battlefield will become who can offer companies a seamless experience across both the existing public cloud platforms and on-premises environments. IBM’s acquisition of Red Hat is a recognition that IBM needs to have a story there, one it sees the ability to provide by acquiring Red Hat, a common layer of infrastructure used in both on-premises deployments and across public cloud deployments.

JAXenter: You mentioned that the window for addition public cloud platforms to gain traction has passed completely. Who are the winners?

Karthik Ramasamy: Amazon, Google, and Microsoft have won the public cloud infrastructure race in most of the world. The one exception of note is in China where the public cloud provider market is still evolving and where Chinese-based companies are also competing.

JAXenter: Can IBM make up for lost time with the acquisition of Red Hat or is the race already lost?

Karthik Ramasamy: The race to compete to offer public cloud infrastructure appears to be over, but what this acquisition highlights is that the race to own the higher layers of infrastructure and services is the new battleground in cloud.

The race to own the higher layers of infrastructure and services is the new battleground in cloud.

Because there is an emerging desire among organizations for solutions that can connect and be used across clouds (both to avoid cloud vendor lock-in and because of the reality that organizations increasingly are already using multiple cloud providers), there is an opportunity for vendors who can provide multi-cloud and hybrid cloud software platforms and solutions to capture mind share and market share.

JAXenter: Both IBM and Red Hat are members of the JCP EC. Do you think they should both keep their seats?

Karthik Ramasamy: Community and standards bodies almost always benefit from a balance of interests rather than any concentration of power aligned with a single member company, and in that light, it would be wise to have IBM not have greater influence there by virtue of having multiple seats.

Thank you!