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Red Hat’s Paul Cormier: ‘We Won’t Give IBM Any Favorable Deal’

The new CEO at the open source leader talks to CRN about how Red Hat maintains neutrality with all its cloud partners after a year as a Big Blue subsidiary. ‘The other guys would never work with us if they were going to be at a disadvantage all that time.’

Red Hat CEO Paul Cormier told CRN that the Linux powerhouse does not and will not provide parent IBM any special treatment as a cloud partner in accordance with strict rules for maintaining neutrality in its technology alliances.

“One of the tenets we have is: when we embed in an IBM product, even though we roll up financials to them, we charge that other product group for the product, we make a deal with them,” Cormier said in describing the relationship. “We won’t give IBM any favorable deal, either in pricing or function or support or anything that we’re not doing with another partner. That’s part of that neutrality.”

Almost one year after Big Blue paid a whopping $34 billion for the Raleigh, N.C.-headquartered open source software leader, Cormier said little has changed in how Red Hat develops product roadmaps and engages its channels. And Red Hat’s relationship with IBM remains not much different from other cloud providers.

[Related: Red Hat Summit: Linux Is The Foundation, OpenShift The Future]

“That’s understood on both sides,” said Cormier about an hour after getting off a call with IBM CEO Arvind Krishna. “Very well understood on the IBM side. We set our own pricing, we set our own discounting. The other guys would never work with us if they were going to be at a disadvantage all that time. It just doesn’t make sense.”

That neutrality was on display at the Red Hat Summit 2020 Virtual Experience conference a few weeks back, when Red Hat extended a relationship with Microsoft to deliver OpenShift 4 on the Azure Cloud, and then the following week with a similar offering with Amazon Web Services.

“I’m not even sure IBM was aware of what we were announcing with them,” Red Hat’s CEO told CRN.

With thousands of ISVs certified to Red Hat’s platform, neutrality wasn’t only a business necessity going forward, but a key driver of the IBM deal, he said.

Red Hat’s defining value proposition is enabling hybrid cloud—giving application developers, IT operations and security teams the same environment across any footprint spanning on-premises, bare-metal, virtual machines, private cloud and public cloud, Cormier told CRN.

As such, “we have to be able to work with all those public clouds and all those other partners,” he said.

That doesn’t mean Red Hat wont aggressively press to its advantage the go-to-market synergies that come with being a subsidiary of an industry behemoth.

“The other side of the calculus was IBM could help us scale,” Cormier told CRN.

In the increasingly crowded Linux and container arenas, IBM’s extensive global reach can help Red Hat penetrate more markets and industries. The respective account teams are working closely to achieve that goal, Cormier said.

“Them taking us to many of the accounts that we may or may not have been in before is part of that scaling calculus,” he said. “But the rest of the company, there’s really not been any change at all.”

Red Hat’s balancing act in some ways resembles the tightrope VMware has walked with its hybrid cloud strategy in the wake of Dell Technologies’ $67 billion acquisition of EMC in 2016.

Even as VMware CEO Pat Gelsinger has independently forged game-changing partnerships across its software stack, Dell Technologies, which took hold of 82 percent of VMware by buying EMC (VMware remains publicly traded), has pressed the virtualization software giant to deliver more end-to-end innovation on Dell hardware platforms.

IBM, however, looks to Red Hat to propel its cloud business through a more hands-off, non-preferential relationship.

Big Blue has discontinued and shifted products to leverage Red Hat technology and talent—abandoning its own Kubernetes platform and some middleware runtimes to standardize on Red Hat OpenShift and then revamping its portfolio with a series of Cloud Paks that deliver solutions embedded in Red Hat’s container platform.

But those are IBM products, Cormier emphasized. “We charge them for that, they give us a certain price per unit for that.”

IBM has even taken measures to ensure a one-way technological exchange, Cormier said, including the transfer of 200 of its engineers to Red Hat to continue their work developing a multi-cluster container management solution.

Red Hat channel partners are closely watching the dynamic play out under the leadership of the 19-year Red Hat veteran who took the top job two months ago after his predecessor, Jim Whitehurst, became president of IBM.

Partners had been speculating about how much independence Red Hat would maintain ever since IBM announced its intention to buy the company, said Joe Dickman, senior vice president at Vizuri, a Red Hat consultancy based in Virginia.

“What we’ve seen is a strong commitment and plan for remaining open and neutral,” Dickman told CRN.

Cormier is the right person to advance that strategy, Dickman said, as he had been a strong proponent of maintaining Red Hat’s neutrality across all its technology partners in his previous role as product chief, something Dickman saw firsthand as a longtime member of Red Hat’s Partner Advisory Council.

“IBM is actually increasing their market reach by enabling Paul Cormier to stick to the founding principles of Red Hat by remaining open to innovation and collaboration by all,” Dickman said.

Last month’s joint releases with Microsoft and AWS illustrated Red Hat’s commitment to enable broad adoption in the public cloud of the customer’s choice, Dickman said. That’s been a boon for Vizuri’s work developing multi-cloud offerings, including an insurance platform supported by Red Hat’s OpenShift and Process Automation Manager.

“This is directly in line with his desire to ensure OpenShift remains consumable in any cloud the customer desires,” Dickman said. “I believe that keeping Red Hat Red Hat is good for everyone, including IBM.”

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