Saul Medeiors Affiliate Marketing: IBM CEO: Red Hat Purchase is About Resetting the Cloud Landscape

Monday, October 29, 2018

IBM CEO: Red Hat Purchase is About Resetting the Cloud Landscape

IBM’s $33 billion all-cash deal for Red Hat is expected to literally reset the cloud landscape says IBM CEO Ginni Rometty. “This now changes the cloud battle to open, which is what we both are together, to proprietary. This allows them to move mission-critical work safely and securely,” said Rometty.

It’s All About Resetting the Cloud Landscape

For us, it’s all about resetting the cloud landscape. This is to create the number one company that will be the number one hybrid cloud provider. If you look at this with our clients, right now, it’s everyone moving to the cloud, but it’s really only 20 percent though. I call that chapter one. Chapter two is to move the next 80 percent and that’s what this is about. But to move that 80 percent they are going to need what this combination brings them.

Based on the hundreds of notes I know Jim (Jim Whitehurst, CEO, Red Hat) and I both got, clients see this very clearly. Chapter two is about hybrid cloud. This is how they move the remaining 80 percent of their work to the cloud… you have to be hybrid, you have to be able to handle multiple clouds, you have to be open technologies, you have to do multi-cloud management, and that’s what we can do.

It’s $1 Trillion and Clients Don’t Want Lock-Ins

We’ve been investing in cloud a long time, a $19 billion cloud right now and this is what makes us number one for this next chapter of the cloud. This is a $1 trillion emerging market and that’s what we’re going after. It’s $1 trillion and clients don’t want lock-ins.

This gives them a portable answer here. They want to be able to run on-prem, in a private cloud, in a public cloud, multiple public clouds, and that’s what we do together. I think the world doesn’t realize that Linux is now the number one platform, not just on-prem, it’s the destination in the cloud. Now we own the number one starting point and the destination.

This is About Lifting All of IBM

This is a very fair price if anyone understood the prized asset we’re buying and Jim’s built a great company. Unlike others, Red Hat has high growth, high profit, and cash. This is why I think really the most important thing for our investors is that this is about lifting all of IBM. It is accretive to our high-value model.

This is about being accretive in year one for free cash flow and gross margin. Most important, we are still going to go ahead with a very strong growing dividend and that is really key to our shareholders.

This Changes the Cloud Battle

This makes perfect sense. This is what these clients tell me day in and day out they need for chapter two, that 80 percent of their work can’t move without what we bring them and they don’t want lock-in. This now changes the cloud battle to open, which is what we both are together, to proprietary. This allows them to move mission-critical work safely and securely. We can secure this from the firmware up. This is about making open source safe end-to-end mission-critical work moving accretive to IBM’s high-value model, strong continued growing dividend, all around everyone wins.