[Beowulf] Oh.. IBM eats Red Hat

[Robert G. Brown]

On Tue, 30 Oct 2018, Chuck_Petras at selinc.com wrote:

> Cringely has some interesting observations...
> 
> "The deal is a good fit for many reasons explained below. And remember Red
> Hat is just down the road from IBM?s huge operation in Raleigh, NC.

Slightly backwards.  RH is back on NC State's campus (where it began),
having moved out of Durham a few years ago.  IBM is in the Research
Triangle Park, which is a bit closer to Durham (closest) and Chapel Hill
(second closest) than it is to Raleigh, but is basically in "neutral
ground" in between, with these three and surrounding suburbs and urbs
all three acting as bedroom communities for RTP.

But there is plenty of room in all three corners of the triangle plus
RTP plus the surrounding countryside for expansion and/or unification.
The interesting question in my mind is whether or not RH will stay
inside NCSU at all now that they are bought out.  I could easily see
them moving into a shiny new building in RTP or out on the east side of
Durham.  They both draw extensively from the congruence of Duke, UNC,
NCSU, and NCCU (four Universities within twenty miles of RTP and about
25 miles of each other) and the fact that this is a really good place to
live, with a very high percentage of the population having at least a
bachelor's degree and a very high percentage having a graduate degree as
well.  At one point, the Triangle had the largest concentration of MDs
and PhDs per capita in the world, but that's been diluted by migration
and changes in the economic profile so that research, medicine and
education, while huge, are smaller proportions of the overall
population.

> 
> "Will Amazon, Google, and Microsoft now run out and buy SUSE, Ubuntu,
> Apache, etc? Yes.
> 
> "Will there be a mad rush to create new Linux distros? No. I think that boat
> has already sailed and further Linux branding won?t happen, at least not for
> traditional business reasons.

Google already has one.  It's called "Android".  Microsoft has been
flirting with Linux for the first time in forever as every one of their
efforts to compete with Android and IOS has underwhelmed, if not
flopped.  At this point Linux actually owns a substantial chunk of the
desktop, in the form of Android on tablets that have largely replaced or
augmented actual computers, and is just under Apple in the phone market
with M$ a joke down near the bottom in both domains.  But Android is
vulnerable -- lots of people dislike it and dislike the play store and
all that goes with it and with iOS.  IBM has the resources to actually
make an OPEN tablet/phone OS if they choose to and are at least as
likely as M$ is to be able to step into the market and steal away
mindshare from Android and iOS -- if they couple it to a slick AI
component, maybe semi-proprietary, they might even jump to the head of
the line as Alexa and Siri etc leave a great deal to be desired.

> "These big questions have yet to be answered, of course. Only time will
> tell. But we?ll shortly begin to see hints. What happens to Red Hat
> management, for example? There are those who think Red Hat will, in many
> ways, become the surviving corporate culture here ? that is if Red Hat?s Jim
> Whitehurst gets Ginni Rometty?s IBM CEO job as part of the deal. That?s what
> I am predicting will happen. Ginni is overdue for retirement, this
> acquisition will not only qualify her for a huge retirement package, it will
> do so in a way that won?t be clearly successful or unsuccessful for years to
> come, so no clawbacks. And yet the market will (eventually) love it, IBM
> shares will soar, and Ginni will depart looking like a genius.
> 
> [SNIP]
> 
> "In the end the C-suite of IBM may be finally admitting to themselves what
> you and I have known for several years ? that their strategic imperatives
> are not doing as well as they promised. They also know they?ve invested way
> too much in stock repurchases and way too little in the business. So with
> this Red Hat deal they?ve basically bet the farm to get themselves back in
> the game.
> 
> "With Whitehurst at the top of IBM, the company will not only have an
> outsider like Gerstner was, it will have its first CEO ever who won?t be
> coming with a sales background. This is very good, because IBM will have a
> technical leader finally running the show.
> 
> "Let?s review:
> 
> "Ginni Rometty is past the age where IBM likes to retire CEO?s, which is 60.
> 
> "Jim Whitehurst is 51, the age when IBM likes to hire new CEO?s.
> 
> "I don?t see Whitehurst moving to Armonk, I do see IBM moving to Raleigh.

I'm not sure about that -- NYC is still the center of the financial
universe.  I'd love to see it happen, but they don't have to "move",
they can just create the tech vice-capital of IBM in the park (where
they already have a strong presence) while still leaving the bookkeepers
and stock brokers and sales people in Armonk.

> "I do see Whitehurst as CEO of IBM in six months or less.
> 
> "The Red Hat team will expand their products into new areas. IBM executives
> will retire in droves because they can?t compete and will resist learning
> something new.

That's the interesting possibility.  IBM used to be right up there with
Bell Labs in their research capabilities and investment.  RH isn't
really all that creative IMO, but they are arguably one of the two or
three main poles in the Linux universe, and IT feeds on an enormous
global bank of very smart people making many small, and some large,
contributions.  I would bet that Linux absolutely dominates the
activities of the world's best programmers by numbers if not by talent
-- even if M$ and/or Apple hires a pile of them, the pile isn't close to
the number that work on Linux for free or as a paid position.  IBM STILL
has some very, very smart folks working for them, and I could see a lot
of synergy in the union, if they don't let corporate wonks divert them
from their creativity.

    rgb

Robert G. Brown	                       http://www.phy.duke.edu/~rgb/
Duke University Dept. of Physics, Box 90305
Durham, N.C. 27708-0305
Phone: 1-919-660-2567  Fax: 919-660-2525     email:rgb at phy.duke.edu