Inside Advanced Scale Challenges|Monday, February 18, 2019
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IBM: Red Hat Gives Us Both Ends of Cloud 

(Syaheir Azizan/Shutterstock)

Emboldened by strong quarterly earnings and annual guidance, IBM executives again this week portrayed the company’s pending acquisition of open-source leader Red Hat as positioning it to lead the hybrid cloud segment.

“When you look at Red Hat, for the first time ever Linux has surpassed Microsoft [Windows] on operating systems, both on the on-prem side and in the cloud,” IBM CIO James Kavanaugh told CNBCafter the company’s (NYSE: IBM) earnings call on Tuesday (Jan. 22).

The Red Hat (NYSE: RHT) acquisition, which IBM expects to close in the second half of this year, means “we own the starting point and we now own the destination point,” Kavanaugh added.

IBM CEO Ginni Rometty has emphasized the cloud market is entering a new phase as early cloud adopters shift from moving low-risk applications or renting infrastructure to migrating core business apps to the cloud. IBM reckons this “second chapter of cloud adoption” includes more than 80 percent of current workloads.

“We are at a point in time right now where we’ve built out our IBM cloud architecture, we’ve built out our datacenters around the world, invested significantly in capital expenditures,” added Kavanaugh.

“We think right now the position IBM is in and, more importantly, the position our clients are in, and what they are telling us about moving through the first phase of cloud—which really was dominated based on pure public [cloud] and economics—to now this second phase of cloud [which] is going to be really around the tough work: It’s going to be around shifting mission-critical workloads [and] real business value.”

IBM said its annual cloud business totals about $19.2 billion. It has in recent weeks announced a steady stream of new cloud customers, most recently BNP Paribas (OTCMKTS: BNPQY), France’s largest bank, and a $260 million cloud deal with the Bank of the Philippines Islands.

Earlier this month, IBM announced separate cloud partnerships with Juniper Networks (NYSE: JNPR) and Vodafone (NASDAQ: VOD).

A $325 million deal with Juniper Networks will help shift the networking vendor’s IT infrastructure to the cloud. IBM said it would work with Vodafone Business to launch a 5G AI effort in Europe.

Juniper Networks also said it would use IBM’s automation and cognitive tools for application management as it moves to a cloud-native posture.

The eight-year, $550 million (€480 million) partnership would combine Vodafone’s 5G, Internet of Things and edge computing expertise with IBM’s multi-cloud platform as the mobile carrier leverages the new wireless standard to link sensors and other IoT devices.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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