IBM to Acquire Red Hat

IBM and Red Hat have announced they have reached a definitive agreement under which IBM will acquire all of the issued and outstanding common shares of Red Hat for $190.00 per share in cash, representing a total enterprise value of approximately $34 billion.

More simply put, IBM is acquiring Red Hat.

“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, IBM Chairman, President and Chief Executive Officer. “IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.

“Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs,” she said. “The next 80 percent is about unlocking real business value and driving growth. This is the next chapter of the cloud. It requires shifting business applications to hybrid cloud, extracting more data and optimizing every part of the business, from supply chains to sales.”

This acquisition brings together the best-in-class hybrid cloud providers and will enable companies to securely move all business applications to the cloud. Companies today are already using multiple clouds.

However, research shows that 80 percent of business workloads have yet to move to the cloud, held back by the proprietary nature of today’s cloud market. This prevents portability of data and applications across multiple clouds, data security in a multi-cloud environment and consistent cloud management.

“Open source is the default choice for modern IT solutions, and I’m incredibly proud of the role Red Hat has played in making that a reality in the enterprise,” said Jim Whitehurst, President and CEO, Red Hat. “Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience –  all while preserving our unique culture and unwavering commitment to open source innovation.”

BM and Red Hat will be strongly positioned to address this issue and accelerate hybrid multi-cloud adoption. Together, they will help clients create cloud-native business applications faster, drive greater portability and security of data and applications across multiple public and private clouds, all with consistent cloud management.

In doing so, they will draw on their shared leadership in key technologies, such as Linux, containers, Kubernetes, multi-cloud management, and cloud management and automation. 

IBM’s and Red Hat’s partnership has spanned 20 years, with IBM serving as an early supporter of Linux, collaborating with Red Hat to help develop and grow enterprise-grade Linux and more recently to bring enterprise Kubernetes and hybrid cloud solutions to customers.

These innovations have become core technologies within IBM’s $19 billion hybrid cloud business. Between them, IBM and Red Hat have contributed more to the open source community than any other organization.

With this acquisition, IBM will remain committed to Red Hat’s open governance, open source contributions, participation in the open source community and development model, and fostering its widespread developer ecosystem. In addition, IBM and Red Hat will remain committed to the continued freedom of open source, via such efforts as Patent Promise, GPL Cooperation Commitment, the Open Invention Network and the LOT Network.

IBM and Red Hat also will continue to build and enhance Red Hat partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud, Alibaba and more, in addition to the IBM Cloud. At the same time, Red Hat will benefit from IBM’s hybrid cloud and enterprise IT scale in helping expand their open source technology portfolio to businesses globally.

Live @ Pulse 2012: Steve Mills Keynote: Running Linux Like A Scalded Dog

Welcome to the Day Two Pulse Keynote summary, whereby I try to consolidate a gazillion thoughts, stories, and case studies into a coherent narrative.

First, know we had to turn off all our digital gadgets so that “iLuminate” could come onstage and dance with their lighted costumes. Their performance was amazing, but I don’t have any pictures to share so you’ll just have to trust me or go watch them on YouTube here:

Tivoli veep Scott Hebner came back onstage after the dancing was over to explain that today we were going to share our client’s success stories and that “we must achievee sharper insight into a seemingly endless infrastructure.”

Today was moving day, as it were, where we start to learn all about implementation and roadmaps to success, Hebner promised.

Really?  I thought it was the day of the night that Maroon 5 took the stage!

Hebner went on to assure the Pulse audience that “we spend as much time as we can how to support our customers, as we do actually building the technologies.”

He then explained the critical importance, capabilities, and skills of our business partners through a pretty standard but relevant BP interview video, before going on to congratulate all the IBM Tivoli Business Partner award winners for 2012.

Before Hebner turned the stage over, he mentioned one last key point, that IBM has long been committed to open standards, a commitment that continues with cloud computing and IBM’s co-founding of the “Cloud Standards Customer Council (see www.cloud-council.org), which already has over 300 active members in the form of companies like Boeing, Kroger, and others.

Customer-driven cloud standards, not vendor driven.

Hebner then introduced IBM senior VP and group executive, software and systems, Steve Mills, who “has three decades of helping our clients solve their business problems.”

IBM Software senior VP and group exec, Steve Mills, throws down the gauntlet at Pulse 2012, explaining that "Linux runs like a scalded dog" on System z and that more IT organizations need to make more decisions based on economic realities.

Mill’s keynote today was impassioned, as much didactic lecture as informative overview.  Mills explained he was going to give a perspective on information technology that “centered on economics,” clearly perturbed at the continuing politics in many IT organizations that lead to bad decisions driven by turf rather than data.

To prove his point, Mills used the IBM story as one that he could relate “the art of the possible,” one of consolidation and efficiency that focused on best outcomes and achievements, not internal politics.

He put up a slide (see sidebar below) that explained how smarter planet solutions are increasing the demands placed on IT.  For example, data centers have doubled their energy use in the past five years, and there’s an 18% increase in data center energy costs projected.  The costs of the IT assets themselves, Mills pointed out, are only a small and marginal component of IT’s overall costs.  Labor, energy, and other costs are a much more substantial component of the costs, so IT has to work much smarter, and in a much more automated fashion, to keep the costs reasonable.

Smarter planet solutions have increased demands on IT, with 50% year-over-year growth in the digital universe and internet-connected devices growing 42% year-over-year.

Sprawl drives costs, Mills explained. “We know this from IBM, talking to thousands of businesses around the world.”

But, he went on, “we eat our own cooking,” and that IBM consolidation efforts to date had saved over $100M and counting, and that the TCO comparison for distributed workloads versus those on z Systems is a substantial savings on virtualized Linux via z.

“Linux runs like a scalded dog on the mainframe,” Mills asserted, the quote of Pulse 2012 thus far.  Mills elaborated on IBM’s investments in System z: “If the work can be consolidated onto Z, we do it.  System z plays a critical role in IBM’s journey. Migrations to System z have delivered almost 60% of the project’s total cumulative savings to date.”

But too many organizations don’t look at putting the right workloads in the right places and systems.

With much of IBM’s own IT workload consolidation, “We can give better service faster in IBM relative to the applications they run” Mills detailed.  For example, IBM reduced server provisioning from 5 days to 1 hour. Configuration, operations, management, and monitoring labor was reduced by 50%.

In the collaboration realm, IBM now has more than 300M meeting minutes in the cloud per day and supports >85% of IBM’s overall web conferencing needs (which are, trust me, extensive. We IBMers mostly don’t live in offices anymore — we live in emeetings from our home and mobile offices!)

His message was clear: Focus your IT investments based on the reality of your business, not territory or political alignments.

As always, Steve concluded with some key customer examples. Nationwide Insurance saved $15M cost savings over three years using Linux on Systems z.  Now, they have 85-90% server utilization and an 80% reduction in environmental costs.

Technische Unviersitat Munchen replaced 150+ servers with two IBM Power servers, saving 85%, and energy consumption reduced by 80%.

Carter’s Inc., a leading children’s apparel company in the U.S., now accelerates data backup by 83% and achieves a 23:1 data compression ratio when it virtualizes its data storage environment. This has reduced data backup time from 12 hours to 2 hours.

Then, Steve Mills did something he doesn’t often, and that was to open the kimono.

In fact, yesterday during our interview with Steve, I asked him what, if anything, had changed since he had taken helm of the IBM Systems group (along with his existing Software responsibilities).

His response was revealing: Nothing had changed. Work integrating our systems and software for optimizing workload would continue as it had, if not accelerate.

The following slide reveals some of the details.  Based on these comments, I would expect more news on this front very soon.  : )

I wouldn't want to read *too* much into this, but it looks like to me, IBM's coming out with some new and integrated systems, and soon. Just so long as they continue to run that "scalded dog Linux!"

New Big Iron: Introducing The zEnterprise 114

IBM introduced some new big iron earlier today.

The new server is the IBM zEnterprise 114 mainframe server and is geared towards mid-sized organizations looking to enjoy the benefits of a mainframe as the foundation for their data centers.

This box costs 25% less and offers up to 25% more performance than its predecessor, the System z10 BC server.

Clients utilizing this new server can consolidate workloads from 40 x86 processors running Oracle on to a new z114 with just three processors running Linux…that’s 40 down to 3.

Over a three year period, total costs for hardware, software, and support on the new z114 as compared to consolidated servers can be up to 80% less with similar savings on floor space and energy.

Workload Optimized, Scalable And Secure By Design

The z114 was also built with scalability in mind.  Clients can start with smaller configurations and access additional capacity built into the server as needed without increasing the data center footprint or systems management complexity and cost.

The z114 is powered by up to 14 of the industry’s most sophisticated microprocessors, of which up to 10 can be configured as specialty engines.  These specialty engines, the System z Application Assist Processor (zAAP), the System z Integrated Information Processor (zIIP), and the Integrated Facility for Linux (IFL), are designed to integrate new Java, XML, and Linux applications and technologies with existing workloads, as well to optimize system resources and reduce costs on the mainframe.

By way of example, using a fully configured machine running Linux for System z, clients can create and maintain a Linux virtual server in the z114 for as little as $500 per year.

The z114 also offers up to an 18% performance improvement for processing traditional System z workloads over its predecessor the z10 BC, and up to an additional 25% improvement for microprocessor intensive workloads using compiler enhancements.

The z114 runs all the latest zEnterprise operating systems including the new z/OS V 1.13  announced today.  This new version adds new software deployment and disk management capabilities.

It also offers enhanced autonomics and early error detection features as well as the latest encryption and compliance features extending the mainframe’s industry leading security capabilities.

Additional compliance and encryption features, the result of a multi-year effort from IBM Research, further enhance security with cryptography built into the DNA of System z, by designing hardware with processor and coprocessor based encryption capabilities.

Where It Fits

At a starting price of under $75,000 — IBM’s lowest ever price for a mainframe server — the zEnterprise 114 is an especially attractive option for emerging markets experiencing rapid growth in new services for banking, retail, mobile devices, government services and other areas.

These organizations are faced with ever-increasing torrents of data and want smarter computing systems that help them operate efficiently, better understand customer behavior and needs, optimize decisions in real time and reduce risk.  

IBM also introduced new features that allow the zEnterprise System to integrate and manage workloads on additional platforms.  New today is support for select System x blades within the zEnterprise System.   These select System x blades can run Linux x86 applications unchanged, and in the future will be able to run Windows applications.

New Financing Options

IBM Global Financing offers attractive financing options for existing IBM clients looking to upgrade to a z114 as well as clients currently using select HP and Oracle servers.

For current System z clients, IBM Global Financing (IGF) can buy back older systems for cash and upgrade customers to the z114 on a Fair Market Value (FMV) lease, which offers a predictable monthly payment.

IGF will remove and recycle these older systems in compliance with environmental laws and regulations and pay clients the fair market value of  HP and Oracle-Sun servers.   IGF is also offering a 6 month deferral of any hardware, software, services or any combination for clients who wish to upgrade now, but pay later.

IGF is also offering a 0% financing for 12 months on any IBM Software, including IBM middleware for the z114 such as Tivoli, WebSphere, Rational, Lotus and Analytics products.

For additional information please check out this video or visit the IBM Systems website.

IBM’s Virtual Desktop

Happy Monday.

I never published my picks for this week’s AFC and NFC championship games for the NFL, but I’m going to tell you them after the fact, and just to prove what an Honest Abe I am, I’m going to tell you the good and the bad.

First, I picked Green Bay over the Bears.  Chicago, you’re a wonderful city, if cold this time of year, but I just figured Green Bay QB Aaron Rodgers had the mo going into this game, and I was right.

However, I don’t agree that quickly replacing 2nd stringer Collins with Hanie was a bad idea, as Collins wasn’t getting it done, Cutler was already out, and Hanie went on to complete 13 of 20 passes for 153 yards AND lead two scoring drives.

As for the Jets and the Steelers, well, I had that one all wrong.  But then again, the Jets that showed up in ‘Burgh country were not the same team I saw beat up on the New England Patriots last week.  I don’t know what happened to that team, but my cheer for “Jets, Jets, Jets” was transformed into “Crash, Crash, Crash” to my friends on Facebook.

So, the Pittsburgh Steelers and the Green Bay Packers will play Superbowl XLV at Jerry’s House in Dallas.  Looking forward to it (and, as always, to the TV commercials, silly though many of them will likely be).

Now, back to business.  IBM made an announcement today worthy of a few pixels when we announced the Virtual Desktop for Smart Business, a new mobility offering that provides anytime, anywhere access to personal desktops from mobile devices (including tablets, netbooks, laptops, and thin clients).

This new IBM Virtual Desktop lets Windows or Linux desktops be hosted and managed centrally, which as most IT administrators would concede, can help lower the cost and complexity of managing PC environments as they deploy new apps and automagic software updates (and, in turn, help reduce help desk requests).

The new solution is flexible, in that the Virtual Desktop for Smart Business can be deployed on a customer’s own infrastructure or through an IBM Business Partner’s “private cloud” hosted environment.

IBM Virtual Desktop: Self-Configuring, -Healing, and -Protecting

The IBM Virtual Desktop has self-configuring, self-managing and self-protecting features that enable easy installation and management, plus continuous backup and recovery.

“IBM continues to tackle the needs of smaller companies with powerful solutions that are easy to install, easy to manage and priced right,” said Ken Espiau, Operations Director, Northcom Technologies, an IBM Business Partner. “With IBM’s Virtual Desktop offering, there’s only one console, one system and one implementation to make managing desktops much easier. Our clients can realize benefits of cost savings from the desktop of up to 40% while we’re able to gain a recurring revenue stream on back end management.”

The solution is offered as a pre-integrated, ready-to-run software package priced at $150 per user per year for a one year contract.

IBM Virtual Desktop will be delivered through IBM Business Partners who will provide local consulting, networking and software infrastructure skills to ensure smooth installation. An early adopter program drew strong channel interest with well over 100 IBM Business Partners actively providing feedback and preparing to use the program to tap into the growing demand for desktop virtualization solutions.

IBM Virtual Desktop for Smart Business is available today in North America, the UK, Germany, France, Italy, Spain, Belgium, Netherlands, Luxembourg and Poland (although the $150/user cost is subject to pricing variance local market depending).

IBM plans to make the offering available in China, India, Singapore, Australia and New Zealand at the end of the first quarter of 2011.

IBM Business Partners can take advantage of Virtual Desktop training and sales enablement resources here to get started providing solution bundles with System x server and storage configurations.

Smarter Software, Better Business

I went for a walkabout along the Las Vegas Strip late this morning, partially to walk off some of the jetlag and partially to do a quick photo safari.

I’ll work to share some of the pics later, but for now I wanted to share some thoughts about how software is changing the way we live on our smarter planet, which I think will provide you with a broad backdrop for the kickoff of IBM Pulse 2010 and the news that will soon begin to emanate from here in Vegas.

Be forewarned, this is a lengthier post than usual, so settle in.

On a smarter planet, people consume only what they need, when they need it — my excursion to McDonald’s this AM for breakfast aside.

By way of example, IBM is working with a leading international energy provider to launch an automated energy management system to help over 11K households to better control their energy usage.

With such a system, users will be able to establish consumption protocols to minimize electricity use in peak periods and to take full advantage of renewable energy resources when available.

On a smarter planet, people also know the best way to get from point A to point B (Note: My hopscotch trip across Europe last week was not such a journey!).

The Singapore Land Transportation Authority is building just such a capability with improvements on one of the most modern, affordable and heavily used public transport networks in the world. It includes an integrated payment option that can be used for the bus or the train, plus parking and vehicle congestion charges.

But the improvements don’t end at the bus stop — the system will also be studying commuter usage data to help design and maximize schedules and routes that will further reduce congestion.

On a smarter planet, people use smarter software to see hidden patterns.

Like at a major health insurance company, which is creating a first-of-its-kind healthcare data aggregation system that will provide information on how people receive treatment for everything from a sore foot to an ailing heart.  Such a system will yield insights that empower companies to develop employee healthcare plans that provide the highest-quality care at the best value.

(I just hope they include jetlag in their menu of studied conditions!)

In each of these examples is a business, government, or industry that has used software in new ways.

Today, more than ever, organizations use software to enable every facet of their business, but with new models and ways of working also come new challenges.

As a result, a new set of needs has emerged.  How to turn information into insights.  To increase agility.  To connect and collaborate.  To enable business service and product innovation.  To drive enterprise operations effectiveness and efficiency.  And to manage risk, security, and compliance.

Addressing these needs requires smarter software.

Smarter software which knows and acts.   Which connects and adapts.  Which monitors, controls, and optimizes.  And which even protects and helps mitigate risk.

We at IBM believe our software can make the world better, one client at a time.  Though a lot of other companies claim to do the same thing, their software doesn’t work like IBM software.

We know what it takes to solve our clients’ biggest challenges, and we’ve spent the last 50 years delivering software that is fueled by expertise, is built for change, and is ready for work.

IBM Software is fueled by expertise, and by knowledge as to how to apply software for real results.

We know industries, the world of business, and how work actually gets done.

We also know systems, both natural and man-made, and we have the proof points to back it up:

40 innovation centers worldwide, focused on solutions for dozens of industries.  26,000 developers.  80 R&D labs. 30K partners worldwide.  And the world’s largest math department.

IBM software is built for change, because it’s open, easily integrated, and flexible.  It’s built with a systems point of view.

Old, new, ours, theirs…we don’t care, so long as we have the opportunity to make it all work together, and to make it work for your busines.

But we also have forward-looking labs and researchers whose sole purpose is to help our clients be prepared for the future.  In the last several years, we’ve made over 100 acquisitions, established 300 SOA patents, and contributed to over 150 open source projects, more than any other company.

We’ve also invested over $1B in Linux and open source technologies, and continue to invest several hundred dollars annually.

That’s putting our money where the penguin’s mouth is.

And IBM software is ready for work.

It’s software that’s robust, industrial-strength, proven, and ready to scale. And we at IBM work to provide ongoing service that helps ensure our clients’ success, because we want to see our software solve their greatest challenges and create new value.

To do so, we have 60 laboratories around the globe that practice agile development and work hand in hand with clients, business partners, and academia, and 17K sales and 5K support staff to help along the way.

Let us help you build a smarter company and a smarter planet by helping you see your hidden patterns, recognize your problems before it’s too late, find your best way from point A to B.

Together, we can build better software to in turn build a smarter planet.

This week at IBM Pulse 2010 in Las Vegas, you’ll hear more about how.

Leaving Redmond

Let me quote freely from this USA Today blog post on the eve of the Microsoft Windows 7 launch that my colleague Bob Sutor Tweeted my way earlier today.

According to a survey conducted by Boston research firm Chadwick Martin Bailey, of 145 IT pros 51% plan to standardize on Windows 7 for laptops and desktops.  Thirty-eight percent intend to do so with netbooks over the next couple of years.

But at what cost?

• Opting out of Windows 7 can save the typical American business with 20 or fewer employees up to $40,000.
• Government agencies crunched by budget shortfalls can save big by avoiding the switch to Windows 7; with 14.7 million state and local government employees and 2.5 million federal workers, saving up to $2,000 per employee would be a huge relief to government spending.

But as the story continues, rather than jump over Vista from XP to 7 (which in many cases will require significant hardware upgrades), why not leave the Windows merry go round, dump it altogether, and move towards a lower-cost alternative?

Say, for IBM and Linux distributor Canonicals’ new Ubuntu offering.