IBM builds telecommunications sector with $ 34 billion Red Hat acquisition

The $ 34 billion acquisition by IBM's Red Hat, which closed on Tuesday, gives the merged organization a complete stack of software and services to help telecom operators and other Internet providers. services to transition their networks to cloud-based platforms, said the leaders of both companies.

"Together, we are sure we can do a lot more than in the past," says Mike Ferris, Red Hat VP Product and Technology Strategy, Light Reading.

Among the strategic technologies offered to IBM by this transaction include its OpenShift platform for running Kubernetes containers on public, hybrid and private clouds, as well as for OpenStack. Kubernetes and OpenStack have both played a fundamental role in deploying 5G and Network Function Virtualization (NFV), Ferris says.

The attractiveness of Red Hat for IBM is largely based on Red Hat's agreements to integrate OpenShift with leading public cloud providers, as well as on the integration of OpenShift with Red Hat Enterprise Linux, Steve Robinson, Managing Director of the Red Hat synergy at IBM, which led the merger for IBM, tells Light Reading. Red Hat also provides a Cloudforms cloud management service and containerized storage.

IBM brings its middleware offering as well as its extended software portfolio and services. The company has a middleware portfolio of over $ 9 billion, including data, analytics, Watson, blockchains, security, transaction processing and business process engineering. IBM has put this software in a container for it to run on Kubernetes, which makes it compatible with OpenShift.

This integration creates a "top-down" stack for service providers and businesses that are developing technology from local to public cloud, says Robinson.

IBM intends to disclose additional information about Red Hat's integration later this summer.

IBM has a strong service provider business – this year IBM signed an ambitious $ 550 million partnership with Vodafone, with Vodafone ceding the management and development of its cloud and hosting business. IBM will provide enterprise cloud functionality, while Vodafone will provide fixed and wireless connectivity. IBM is also associated with Vodafone Idea to enhance the customer experience of the Indian communications provider.

IBM sees every major telecommunication company as a customer, says Robinson.

Red Hat has its own service provider, including a recent agreement with Turkcell, Turkey's leading service provider, which virtualizes a network of 35 million subscribers. Red Hat has partnered with telecom equipment manufacturers and network service providers.

Both IBM and Red Hat are pursuing similar hybrid cloud strategies: telecom operators and enterprises are moving their workloads to multiple public and local clouds, while integrating existing critical workloads running on legacy systems. This runs counter to the early predictions of cloud advocates that all workloads would quickly move to the public cloud on a single public cloud platform. Companies transitioning to the hybrid cloud require an integrated stack that provides comprehensive service level guarantees. IBM believes that Red Hat can help you do that. "Otherwise, you build things on moving sand," says Robinson.

Red Hat's experience with large companies, such as banks and large public cloud platforms, allows it to provide the reliability and quality of services that telecom operators need when they move their networks to the edge and into the cloud, replacing hardware with software, says Ferris.

IBM has a long experience in the service provider industry, as my colleague Ray Le Maistre wrote in November. IBM said last year that 83% of the world's largest communications services provider are customers. It provides systems integration services and OSS systems; invested more than $ 3 billion in IoT platforms and tools; provides CSPs with tools for analysis, artificial intelligence and automation; works with CSPs on blockchain strategies; and has multiple partnerships and NFV initiatives. It is a leading contributor to OPNFV and NAPO.

Size the competition

IBM's hybrid cloud strategy places it in competition with Cisco, which, like IBM, is primarily a business provider but is looking to expand its service provider business. And Cisco, like IBM, sees companies migrating to multiple public and private clouds.

But IBM's main competitor is the combination of VMware and Dell, which holds a majority stake in VMware. As with the IBM-Red Hat combination, Dell and VMware send a message to their customers: partners, but also independent, willing and eager to enter into agreements with competitors if it is necessary to enter into an agreement with a customer.

VMware's support to telecom operators and service providers begins at the highest level of the enterprise. In an address at the company's annual VMware conference in August 2018, CEO Pat Gelsinger said telecom operators were "a huge opportunity." VMware acquired VeloCloud, an SD-WAN provider, in 2017. SD-WAN has become vital to VMware's business as well as NFV.

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– Mitch Wagner Editor-in-Chief, Light Reading

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