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IBM has tried many ways to stay relevant in the world of technology. But it has often been overtaken by rivals like Amazon and Microsoft.
Tuesday, IBM presented its latest strategy: use the purchase of Red Hat, the largest acquisition ever by a software publisher, $ 34 billion, to acquire a significant share of the lucrative cloud computing market.
This agreement is a very ambitious bet for IBM and its leader, Ginni Rometty. Amazon and Microsoft dominate the cloud computing sector, with a third place for Google. (In China, Alibaba is the undisputed leader.) They have the skills to use the Internet and spend billions of dollars a year to build the vast data centers that power the cloud, helping to protect their lead. However, customers are afraid to depend on only one supplier.
IBM arrived late to the company. It has money and data centers, but the company can not compete with the giants of the cloud.
So with the Red Hat deal, which ended on Tuesday, Ms. Rometty brought IBM on a different path. It presents itself as an open and impartial actor in the cloud – Switzerland in face-to-face interaction between the main players.
In Red Hat, IBM is hiring a major provider of software tools widely used to write cloud computing applications. Red Hat specializes in open source software, which means that the base code is free. He has established partnerships with leading cloud services including Amazon, Microsoft, Google and Alibaba.
Under IBM, Red Hat will maintain and, he insists, expand these alliances.
IBM-Red Hat's proposal is to offer a layer of cloud-based software that works with them.
"Write once, run anywhere," said James Whitehurst, executive director of Red Hat, in an interview on Tuesday.
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His phrasing is revealing. This is exactly the same argument as in the 1990s for the Java programming language and platform, developed by Sun Microsystems. Then, fear was locked in the technology of Microsoft, the invading giant of the era of personal computers.
Today, fear in business circles is tied to a powerful cloud provider. And Mr. Whitehurst cited foreclosure concerns, describing the IBM-Red Hat combination as an alternative to "three incompatible walled gardens."
This is a real problem. Most large companies now want and use more and more cloud providers. They are also embracing cloud technology within their own data centers for flexibility and cost savings.
"Multi-cloud Hybrid" is the term used by the industry for this adoption of cloud computing: IT purchased from large cloud providers and another in the cloud performed in-house, and purchased by more than one cloud giant.
The hybrid market is where IBM sees its future. In an interview, Ms. Rometty, general manager of the company, said that helping IBM's enterprise customers move to the cloud was a huge opportunity. It calls this the "Chapter 2" of the cloud, as companies increasingly move common computing tasks to the cloud. Ms Rometty said that there remained about 80% of the transition to the cloud business, and that she compared that to "home renovation". You rely on what you have rather than replace everything.
IBM and Red Hat seem to offer complementary strengths. Red Hat brings software developers open source skills and credibility, while IBM brings industry expertise and marketing momentum.
The plan is plausible, but its success depends on its execution. IBM is committed to keeping Mr. Whitehurst and his management team, as well as Red Hat headquarters in Raleigh, Nova Scotia, its brands and business practices. Mr Whitehurst said the revenues had risen since the announcement of the deal last fall.
In the free software world, where most software is free, Red Hat makes money – with $ 3.4 billion in sales last year – 15% – by providing technical support, complementary services and programs.
But large technological acquisitions are treacherous, inviting a shock of corporate cultures and their egos. The expected result often proves difficult to achieve.
Red Hat will provide IBM with a significant increase in revenue in the near term. The lack of revenue growth has long been a concern for investors since Ms Rometty became Managing Director in 2012. Since then, she has led IBM into a difficult digital transition, magnified by the cloud challenge.
The result remains unclear, but one thing is certain: his legacy as IBM's leader will depend on how well he does it.
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