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IBM CEO Ginni Rometty’s 5 Biggest Statements At The Red Hat Summit

Donna Goodison

‘Working together is the right word. Coming together is not necessarily the way I would describe this,’ IBM CEO Ginni Rometty said about the acquisition during a keynote with Red Hat CEO Jim Whitehurst at the Red Hat Summit. ‘Jim and I have both agreed—Red Hat should stay an independent unit.’

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IBM’s pending $34 billion acquisition of enterprise open-source software provider Red Hat was on stage Tuesday evening at the Red Hat Summit in Boston, where the two companies’ chief executive officers sat down to talk about deal.

In a U.S. Securities and Exchange Commission filing Monday, Armonk, N.Y.-based IBM said that it was notified last week that the U.S. Department of Justice had concluded its review of the proposed acquisition without remedies or conditions.

“IBM and Red Hat continue to work with competition authorities in other jurisdictions, and IBM continues to expect the transaction to close in the second half of 2019,” IBM said in the regulatory filing.

Jim Whitehurst, CEO of Raleigh, N.C.-based Red Hat, introduced IBM CEO Ginni Rometty during the Summit’s keynote session, and they talked about IBM’s early interest in the open-source software movement, the timing of the Red Hat acquisition, preserving Red Hat’s culture, and what technologies most excite Rometty and Red Hat’s role in them.

“It's not just IT users that realize the power of open source to drive innovation,” Whitehurst said. “Today, virtually every IT vendor recognizes that open source is a critical component for driving information technology. And we would not be here today without the support of a myriad of partners who've invested in open source and have been instrumental to getting us where we are. One of the first partners was IBM, who in early days saw the power of open source and invested heavily to bring it to the enterprise. And their investments yesterday, today and tomorrow have allowed and will allow us to accelerate on our mission to truly expand our possibilities.”

“In October, we saw the ultimate validation of that commitment to open source, when IBM announced its attention to acquire Red Hat,” Whitehurst said. “And so I am thrilled to have Ginni Rometty here tonight to discuss why she and IBM see Red Hat and open source as so important to their—and soon to be our— future.”

Continue on to read about Whitehurst’s conversation with Rometty.

IBM’s Open-Source History

Whitehurst: We've been working together over 20 years, and I think some people forget that, and how early IBM invested in open source and saw that opportunity. I am so excited about what we are going to be able to accomplish together with just such greater scale that we’ll be able to bring to our customers and, importantly, to the open-source communities that are so critical to the work that we do.

Rometty: It was ’74. IBM did System R, kind of a precursor to the relational database. But to Jim's point, it was ’98 [Apache], and then it was ’99, so when he says we invested in Linux and in Red Hat, it was a billion dollars. And in ’99, that was a lot of money. I mean it’s still a lot of money. And so is $34 billion, just to be extra clear.

I just go back in that time, and then I just think about everything that has followed, whether it was Eclipse, Hyperledger … Istio. There's quite a long list that goes on, so I think those roots are deep between the two of us, and some of the beliefs. This is something Jim and I've talked a lot about. The beliefs in how important an ecosystem is to drive innovation, unless you think you can hire every smart person there is, which none of us can. I have really come to appreciate two big things. One is the importance of open governance, and it is just vital to open source. And then the second piece is around if you're going to take, you have to give. It's really been something that we have instilled for decades about that's OK, you use it, but you’ve got to contribute in a big way. So it's a history of not just what we did; to me, it's as important as those beliefs and how we did it.

Why Now, Why Red Hat?

Whitehurst: Why now, why Red Hat? What did you see in open source that said that now it's important to not just partner in this, but to actually be the leader in open source?

Rometty: Over its long history, you have built a wonderful company … and maybe even more important, a wonderful culture, and a culture about open. I think it's important to pay tribute to what you have done in taking it to this point. I think what brought Jim and I together, as we’ve talked about it over a good period of time, was we both saw an even bigger opportunity in front of us. There’s many joint clients and many not joint clients in the room, and this opportunity that there's so much what I would call ‘mission-critical work’ that can still yet move to the cloud. And to get there, it means all these different islands—whether it's public clouds, private clouds, traditional—you've got to have some way to modernize and connect all those pieces together. And the timing in our mind is really right.

You now have … a fabric in what you guys have built, what will continue to be built. Linux is key, but then you've got Kubernetes, containers that are really going to form what I think is a standard for the world to do this. So the ‘why Red Hat now’ is those things have really all come of age. I think the opportunity is right in front of so many clients. It’s a problem, they want to address this. And it isn't just to move everything to the cloud. It depends where data has to be, where you're at. There's lots of reasons you're going to end up with an environment that's hybrid, and there's a great way to pull more innovation in. So, to me, the timing is exactly right for this now. It's kind of a chapter two for lots of clients, and the technology and the demand for open is so strong. I think what we and you and I would both like to see is … OpenShift be the platform that allows people to take their innovation, get more of it and put it wherever they want to put it.

Red Hat And IBM’s Cultures

Whitehurst: So culture is critically important, I would argue, to Red Hat’s success, and we've worked to build a distinctive culture. IBM is a storied, over 100-year-old company with a really distinctive culture. How do you see those cultures working together, coming together?

Rometty: Well, working together is the right word. Coming together is not necessarily the way I would describe this. Jim and I have talked. This was one of the most important things. To preserve what open source is and the value of it, it is open innovation, so all welcome. So part of what binds us is the same mission. We would both agree we are on a mission to scale open source. So, that's a good place to start from when you talk about two cultures. But the next thing … and Jim and I have both agreed, Red Hat should stay an independent unit. Now we say, well, why would you do that? There's really great reasons for that. The whole idea of having a platform that invites innovation from everyone, it means everyone. So you want to have it built on open source, built on open standards. And then the terms and conditions of open source, so all those reasons, the open ecosystem. The only thing we can help do is help power it to go even further, wider, have more people certified, etc. So think of that as really broad scale horizontally. So, we're both in agreement that stays as an independent unit, and the work that really … the whole team has done —you've worked so hard on that culture—and actually my observation has been the teams … work very well together. They are very like-minded on this.

The other side of this is that then, IBM will change. It's easier for me to change and to change IBM in that so much of what Red Hat does, we’ll build on top of that. And hopefully then what we'll offer to clients is, if they choose, a really secure mission-critical stack, a hybrid cloud stack. So there's a choice, or you have a choice to run it other places. But so really continue, and I hope together we take that—it is the world standard of open. It's just a bigger and broader plate for innovation everywhere.

What Most Excites Rometty About Technology and Red Hat’s Role

Whitehurst: You probably have a better view of what enterprises, what governments, what any large institutions are doing with technology. What most excites you, or what do you see that's really exciting in the future? And then, obviously, how might Red Hat and open source play a role in that?

Rometty: I've had my own experience in reinventing IBM and continuing to, and I see so many other companies out there. I honestly feel we're all at the beginning of a journey, where the first part, there's been a lot of experimentation with lots of interesting technologies, but not as much scale of really true transformation yet. We're kind of now moving into that, so whether it's to scale AI, move mission-critical work, really change the way work is done. It is so fundamentally true that unless you change how people do their work, nothing really changes. It's not to sprinkle technology in there. So I see everybody and so many of our clients, they're kind of right at that stage from experimentation to true transformation right now.

What I think is particularly exciting—the possibilities out in the open-source world—we've been talking about cloud, so that's obviously one, because I think that gives you just a wonderful platform to develop on, run anywhere, bring as much innovation in as you want. You and I agree one thousand percent. The next one would be all of the different forms of AI that are out there … but trusted AI. The purpose is to augment man. The purpose is data should be owned by its owner, and AI that's ethical, explainable, free of bias. I think there's a wonderful opportunity there to put that in workflow. Things like blockchain, the work that's been done in Hyperledger—it's actually in the Linux Foundation.

I'm a big believer that it will take some time, but blockchain can fundamentally change most supply chains. I see the work already we've done with a hundred different companies on food safety. It's another form of open source that I think is really valuable.

I see coming in front of us, just from a technology perspective to reinvent how work’s done, things like quantum. We’ve built the world's first quantum computer offered on the cloud—11 million experiments— but we made a really interesting choice this time. All the development language is open source, it's QISKit. It is all out there and open source. That is where all that innovation will come from. So I see all these technologies, they’ll just layer in. But now we're at this moment of fundamentally people trying to rethink what it is they do—build a platform of their own, with data of their own, and then rethink how their work is done and put all this AI and these other technologies in it. So I think it's a perfect moment.

Red Hat Acquisition A Win

Rometty: I couldn't be more happy about the acquisition of Red Hat. And again, the team has built a fantastic job. We know the job they do for our clients that are in the room. I am extremely respectful of preserving that. I always say to Jim, it's not like I have a death wish over $34 billion. I'm not buying them to destroy them by any stretch. I want them to be successful.

I hope it's a win, win, win. Big and foremost, it's a win for clients, right. This is a win for our clients, a win for our chief technology officers, a win for technology. It’s a way to drive more innovation. IBM is getting a great new leader to join us here.

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