IBM BUYING RED HAT: HOW WILL IT IMPACT THE REGIONAL CHANNEL?
Both companies have strong channel relationships and this move could be good for Middle Eastbased channel partners
IBM’s recent announcement that it will acquire open source vendor Red Hat for $34bn is still being parsed throughout the IT industry, but for the regional channel it should be seen as a promising move that could increase business and revenue for partner businesses. But why do I suggest so?
The acquisition, which IBM says is being made to increase the stakes and opportunities of both companies in the cloud marketplace – especially in hybrid cloud – comes more than 20 years after both first began working together, dating back to when Red Hat was just a start-up offering its open-source Linux operating system as a free download or on CDs at technology conferences.
That long history is one reason the deal makes sense for both businesses, Ginni Rometty, chairman, president and CEO of IBM said in a statement.
Given that the cloud is believed to be a $1trn potential market, bringing both companies’ rich channel ecosystems together will be a good thing for partners because it will add power to their go-tomarket strategies.
Because the acquisition is still awaiting regulatory approvals, it’s still unclear whether the companies will continue to maintain separate channel relationships and structures in the future.
That said, the acquisition is great fit for both companies as well as for partners. In fact, many channel partners in the Middle East today are already investing in various aspects of open-source software, so the deal will likely further those investments. This acquisition if approved, has the potential to take Red Hat and its solutions to a whole new level of scale and broader investment into the hybrid cloud ecosystem.
Given that Red Hat, which already earns
about 75% of its revenue through the channel, it will need to continue its strong relationships with partners to continue growing that figure.
IBM on its part, is acquiring Red Hat, in part, due to Red Hat’s strong revenue growth, and Big Blue has stated that Red Hat will be run as an independent division of the Hybrid Cloud group.
In the meantime, channel vendors should independently keep track of what’s happening as the deal progresses to monitor their options and statuses.
Practically, there should be no immediate impact on relationships or operations as this acquisition is not scheduled to close until well into 2019. But strategically, this does likely mean that Red Hat’s channel relationships will start to be more like IBM channel relationships starting in 2020 to 2021 after this acquisition takes place, assuming that it goes through.