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What IBM-Red Hat means to the cloud and developers

For those that haven’t been paying attention, 2018 is the year of open source. This may seem to be a bit of a strange claim given that open source has been with us for decades (and never did get its “year of the desktop”), but in a world where software matters more than ever, graybeard companies like IBM and Microsoft are paying billions of dollars to reinvent their futures through developers.

The biggest deal of all, of course, and one of the biggest tech deals ever, is IBM’s $34 billion acquisition of Red Hat. IBM CEO Ginni Rometty is almost certainly wrong to suggest the deal “resets the cloud landscape” and will “change everything about the cloud market.” It doesn’t. But what it does is give enterprises a massive reason to pause on full public cloud plans and double down on the hybrid cloud.

IBM gets to try again in the cloud

IBM has talked up its transformation for years, but those same years have seen dwindling revenues, dwindling profits, and dwindling relevance. In every market that IBM says matters most (AI, cloud, etc.), it’s an earnest also-ran. From Watson to SoftLayer, IBM has overpromised and underdelivered.

Red Hat, meanwhile, went all-in on Kubernetes, turning the container orchestration engine into its ticket to cloud relevance. While Red Hat lacks a public cloud offering to compete with an Amazon Web Services or Microsoft Azure, it has set up a fast-growing OpenShift business that gives enterprises a way to navigate their multicloud, hybrid environments.

Red Hat was doing exactly what IBM had hoped to do. Instead, IBM first failed in public cloud and then struggled to come up with a credible hybrid cloud story. Red Hat could give it the latter and thereby a place at the table in the former. That’s why the deal makes a lot of sense.

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