At last week's Red Hat Summit, the elephant at the conference was the $34 billion Red Hat and IBM merger.
As always, Red Hat had major product announcements to make at its annual conference, including the first major release in five years of its flagship operating system, Red Hat Enterprise Linux, as well as an upcoming release of OpenShift, its container platform. The story behind the stories, however, always involved the upcoming marriage between the largest open source software company on the planet to an aging company whose name was once synonymous with the word "computer."
Red Hat understood this going in. In the opening night keynote address, CEO Jim Whitehurst welcomed Big Blue's CEO Ginni Rometty on stage as his first guest. Her mission was to reassure Red Hat customers and supporters that nothing has changed since the IBM merger was first announced in October. Red Hat will retain it's independence as a stand-alone company, she said, repeating what has become something of a mantra for both Rometty and Whitehurst during the six months that have passed since news of the merger agreement was first made. Red Hat will not be rolled into and assimilated by IBM as some open source advocates fear.
"I don't have a $34 billion death wish," Rometty said. "I didn't buy them to destroy them."
After that, Rahul Samant, EVP and CIO at Delta Air Lines, a customer to both Red Hat and IBM (and where Whitehurst served as COO for six years before taking the reins at Red Hat in 2008), talked about the blue skies the airline sees for both companies after the merger.
The keynote was closed with an appearance by a tech superstar. Microsoft CEO Satya Nadella had flown from Seattle to Boston after an appearance the previous day at his own event, Microsoft Build, to show support for the soon to be merged companies. He announced the general availability of Azure OpenShift as a result of a partnership between Redmond and Red Hat. There have been many such partnerships between Microsoft's Azure cloud and Red Hat in the past, he said. There are sure to be many more going forward.
Given this atmosphere, when we at ITPro Today learned we were going to have some private face time with Red Hat's CEO (pictured above) at the summit, we knew we wanted the discussion to center on what Red Hat and IBM might look like post-merger. We were also interested in his input on news coming out of other enterprise Linux companies that might concern Red Hat since the merger was announced.
Whitehurst couldn't tell us everything we wanted to know -- for legal reasons, that will have to wait until after all regulatory approvals have been granted -- but he was able to offer his perspective on what both Red Hat and IBM stand to gain from the merger, a peek at how the two companies might work together after the ink has dried, as well as his thoughts about who is and isn't a Red Hat competitor.
We are presenting the interview in its entirety, lightly edited for readability.
ITPro Today: While I'm not seeing as much pushback from open source advocates about the IBM merger as I would have expected, there's still been some flak from some open source purists who aren't happy see what they view as the crown jewel of open source going to IBM. I was wondering what you would say to people who have worries or concerns about how it's going to end up?
Jim Whitehurst: I'll tell you a couple things. First off, we think about it, and I read in it, that it's a huge victory for open source. I mean, they're not tucking us in, right? We're going to run standalone. And they're a big contributor to open source. They paid more than has ever been paid to buy an open source company. This is really IBM betting its future on open.
“This is one of the largest technology companies in the world ... making a massive, expensive, ringing endorsement of open source.”
Obviously, they do have proprietary software, but broadly they're betting their future on open, open source, and open hybrid cloud. This is one of the largest technology companies in the world, I think making a massive, expensive, ringing endorsement of open source. We look at it internally as this gives us an opportunity to dramatically accelerate what we're doing.
I guess you can put some odd lens on it -- I'd say a very old, 20-year-ago, us-and-them traditional lens -- but if you think about it, everybody has had to embrace open source because it's become so pervasive, and this is one of the largest companies in the world saying "we're staking our future on it."
ITPro Today: And IBM is a company that may be responsible for the big uptake of Linux, with its billion dollar Linux investment around the turn of the century.
Jim Whitehurst: Oh, absolutely. And helping validate it in the early days.
ITPro Today: Have you had any pushback from any of your customer base?
“There have been a few customers that are not great fans of IBM that I think are a little more concerned. ... But honestly, there are some people who aren’t big fans of Red Hat.”
Jim Whitehurst: No. Well, it's odd. Because we don't have regulatory approval we can't go conjointly talk, and so I've spoken to a lot of customers. It's a mix. I don't think I've had any, from an open source perspective, push back. What you get is -- and I don't know what the other side is -- a lot of customers who say "this is great." We had Delta on stage last night, they're a big IBM customer and they're a big Red Hat customer, so a lot of the big customers really, really like it. Now of course, they're all thinking they're going to get a bigger discount, which obviously, we want to create net new value, not figure discounts.
There have been a few customers that are not great fans of IBM that I think are a little more concerned. We've talked about them and we're kind of running it separate. But honestly, there are some people who aren't big fans of Red Hat. IBM's side has gotten that. I would say most customers are cautiously optimistic. They want to see what's in it for them.
We've talked about this open hybrid cloud. I think we need to go make it a reality for customers. Right now, lets say they're neutral because they're just like, "OK, I don't understand what you can do together that you couldn't have done in a partnership." They're not, I would say, concerned about it. But we need to, as soon as we get regulatory approval and can kind of lock hands, really be able to say, "Here's why you can be dramatically better off with the two of us together."
ITPro Today: Now I assume you're going to be helping IBM sell their cloud...
Jim Whitehurst: No, not at all. This is really important. To be a successful infrastructure software vendor you have to be neutral and agnostic. The structure from day one, the key reason we're keeping Red Hat a separate entity, is we have to be able to look at Microsoft, Amazon, and Google, and say we are not at all motivated to preference IBM in any way. It's one of the reasons I wanted to have Satya [Nadella] here. We've spent a lot of time with Microsoft explaining the structure of this. Our sales force is separate and will not be paid or incented at all to work with IBM, relative to anybody else. If the right answers is for us to go in with Amazon, Google, or with Microsoft, we will do that and our reps are incented to do the right thing.
“The key reason we’re keeping Red Hat a separate entity, is we have to be able to look at Microsoft, Amazon, and Google, and say we are not at all motivated to preference IBM in any way.”
Now, the reverse isn't true. So IBM, I think their strategy will be to push our platforms. That's where the synergy is, because as we drive those platforms, they operate on a whole 'nother level than we do with customers and around really driving this open hybrid cloud architecture based on our technologies. There are all kinds of services and other things that they'll do around that, but I think they saw the vision of needing to have this single set of bits that run everywhere, and I think that's the thing that differentiates what we're doing from what anybody else that says they're doing hybrid cloud is doing.
Our vision is to truly be able to have flexibility. Just like with RHEL, back in the day, with the same bits, whether you're running it on HP server, Dell server or anything else. That created true flexibility. So our strategy is: the exact same bits whether you're running them bare-metal, on VMware, or on Amazon, Google, Microsoft, Alibaba, etc. Literally, the same infrastructure stack. When you can deliver that, then you can really be able to go to customers and confidently say you can think about application mobility. You can think about running mission-critical applications across this.
Most people, when they say hybrid cloud all they're doing is providing management tool visibility of workloads running in a heterogeneous environment. So this is running on Amazon, this is running VMware, this is running... There's value to that, but it's not hybrid cloud where you're seeing the same technology stacked everywhere, which is really what creates the consistency that allows flexibility in applications over time, which has been our vision. Obviously, with IBM we think we can actually truly go realize that vision.
“I think Microsoft wanted to highlight the work they’re doing with us, and obviously we want to highlight the fact that nothing’s changed for the cloud providers, we’re marching ahead with them.”
ITPro Today: If I had you build a system for me and I'm using AWS, am I going to be using anything that will lock me in to AWS, where I have a workload that I can't really move?
Jim Whitehurst: Well, that's what we totally say: build it on OpenShift. OpenShift natively runs on AWS, as it does anywhere else, which gives you the opportunity to move applications around.
ITPro Today: And if one of IBM's legacy customers decides they're ready to move to a hybrid multi-cloud, IBM's going to say, lets call Red Hat in and talk about how we can do that?
Jim Whitehurst: Exactly. They should be bringing us into conversations around hybrid cloud modernization.
Recognize that all of this started a little over a year ago. Arvind [Krishna, IBM's SVP of cloud and cognitive software] was at Summit last year, talking about how they were going to deploy all their software assets on OpenShift because they saw the same thing. They need to have a consistent container platform to run things like MQ, WebSphere, or Db2, that can literally run anywhere. The only way they can do that is if they had the same technology stack. So we've been working on this journey with them well before the merger, where they were already building their software to run on OpenShift, so this is the next logical step in that.
ITPro Today: Recently, SUSE's CEO, Nils Brauckmann, said that he's been getting a lot of people contacting him who prefer to do business with an independent player, which is easy for him to say since he just became independent.
Jim Whitehurst: (Laughs) I know, what a shock!
“I would say Ubuntu would probably say Amazon Linux is their biggest competitor, because Amazon Linux is a free Linux deployed on Amazon that has multiple use cases.”
ITPro Today: What do you think about that? What's your take on that?
Jim Whitehurst: I think that infrastructure providers need to be independent and that's why we structured this to maintain our independence. I get what he's saying, but frankly, one of the reasons this was intriguing to us is to truly be able to land a hybrid cloud, with the same infrastructure stack across so many clouds around the world and on all these deployment models. Scale helps, so I think we fully understand the need and that's the needle we're threading: the need to be totally and completely independent, but we also need a parent that has a greater capacity to invest and has that scale.
ITPro Today: And as you said, there's not going to be a tightrope for you to walk. You're still going to be doing partnerships with AWS, Azure, and GCP?
Jim Whitehurst: Oh, absolutely! We have partnerships with all of them today and we'll continue to go forward. I think Microsoft wanted to highlight the work they're doing with us, and obviously we want to highlight the fact that nothing's changed for the cloud providers, we're marching ahead with them.
ITPro Today: Besides SUSE, Ubuntu lately has also been seeming to flex its "independent" muscle with some announcements it's made. Who do you think your biggest competition in the Linux market is?
Jim Whitehurst: Amazon.
ITPro Today: That's a good answer.
Jim Whitehurst: It's not even close. First off, it depends how you think about competition, because Linux is free, right? So I don't think of our competition directly as Linux. I think our competition is around business models around Linux that compete for the same use cases. I think what Ubuntu's doing is great; they popularize Linux. It is a compile and ship approach. They don't talk about and commit to binary compatibility over a lifecycle and all the other things that we do.
It is really incredibly rare that we are competing for the same workload that Ubuntu is. Maybe a little bit on the edge, but I think of them more as another great industry participant, not really a competitor. Amazon Linux, obviously, is driving as a way to deploy enterprise workloads on Amazon, and they're big, and therefore a competitor. At the same time, they're also a big partner of ours, because obviously the deployment model of our open hybrid cloud means the value proposition is the fact that they're multiple clouds. So while they're a competitor, they're also a big partner.
Now SUSE and we compete, but if you say that they're big competitors, it's not even close.
ITPro Today: With Amazon, that's basically where Ubuntu would compete with you?
Jim Whitehurst: Well, that's where it's a little bit blurrier. I would say Ubuntu would probably say Amazon Linux is their biggest competitor, because Amazon Linux is a free Linux deployed on Amazon that has multiple use cases. I want to do a quick, easy dev or website or whatever, well I can use Ubuntu or Amazon Linux, because they're both kept free. So I would say Ubuntu probably sees them as a big competitor, but they also work to use Amazon Linux to drive enterprise applications, therefore they're a competitor to us.
I would say we and SUSE sit next to each other for different roles. Amazon Linux kind of spins both of those, so they're probably both of our largest competitors. I don't know what Ubuntu would say about that, but again, I just think Ubuntu is great. I just don't see them necessarily going after the same types of workloads and the same value proposition that we have.
ITPro Today: I've never seen them in the same category as you either, but they've made some moves recently that have made me wonder if they're going after your market.
Jim Whitehurst: Well, again, there's maybe a little bit of blurriness right at the edge, but again, our value proposition...
Our R&D as a percentage of revenue is higher than the average software company, and it's not because we're doing the upstream, it's all the downstream sustaining engineering we do to commit to a lifecycle, binary compatibility, back porting, schedules -- all those things that we do. Ubuntu doesn't do that.
I'm not saying that's good, bad or otherwise. It is a different model. We call it "compile and ship," and I don't mean that in a bad way, but it is taking the most recent Linux and making it easy to use and exposing that. We're doing a 10-year lifecycle against each release, it's just a fundamentally different thing. Maybe a little bit on the margin there might be a few people who consider one over the other, but generally they're different things for different use cases.