Red Hat to be ‘Switzerland’ within IBM

Neutrality and commitment to open source won’t change after IBM acquisition closes, Red Hat exec says

Red Hat will operate as a kind of “Switzerland” within IBM and maintain its commitment to open source at the conclusion of Big Blue’s takeover of the software company, according to Marco Bill-Peter, Red Hat senior vice president of customer experience and engagement.

Red Hat will function as an independent, distinct unit within IBM’s Hybrid Cloud team and maintain its commitment to open source principles, he told the Red Hat Forum in Sydney.

He described the US$34 billion as a “big elephant in the room” and admitted that he, along with a number of other Red Hat employees initially thought “this is really odd” when the mammoth deal was announced late last month.

Under the deal, IBM will acquire all of the issued and outstanding common shares of Red Hat for US$190 per share.

IBM’s chairperson and CEO Ginni Rometty described the acquisition as a “game-changer”.

“It changes everything about the cloud market,” she said in a statement announcing the deal. “IBM will become the world's #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

For Red Hat, the deal means it can “accelerate the expansion of Red Hat’s leading open source portfolio” and take advantage of extensive cross-selling opportunities, Bill-Peter said. “Obviously IBM is much larger than us, has much bigger go-to-market sales functions — huge opportunities,” he said.

Bill-Peter said, however, as someone based in the engineering side of Red Hat other things — such as the ongoing commitment to open source — were more important to him.

“We truly believe that open source and the open source way leads to better product, better innovation,” he said. “So we  got that assurance, right, and IBM, to be honest, over the last  20 years they have committed to open source… you see how they invested over and over to enable their Power platform with Linux.”

The other commitment is Red Hat operating as an independent business unit that will preserve its “unique culture.”

“That’s really important,” the Red Hat executive said. “Because we have in Red Hat 13,000 people – if the open source culture gets impacted, trust me many of those 13,000 people will leave. I know the commitment if IBM spends a third of their market cap on Red Hat; I know that it’s serious.”

One of the analogies that has been thrown around is that IBM wants “to keep Red Hat as the independent Switzerland,” he said.

He added: “What that means is if they were to just make us part of IBM a lot of our clients, our partners... like let’s say Google and Amazon – they wouldn’t collaborate with us on the next open hybrid cloud. And so that’s why being that Switzerland of IT for Red Hat is really important.”

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