
A Cold Take on IBM, Red Hat and Their Hybrid Cloud - pinewurst
http://www.platformonomics.com/2019/07/a-very-cold-take-on-ibm-red-hat-and-their-hybrid-cloud-hyperbole/
======
cwyers
> But if the strategic logic is to “change everything” thereby “resetting the
> cloud landscape”, they’re really paying over $34 billion for OpenShift.
> Which is a vanilla container runtime. That is open source. That IBM already
> had at least one of (as does everyone else in the industry, including the
> hyper-scale clouds). And one that isn’t a dominant brand or implementation.
> IBM could have bought both Docker and Pivotal at a nice premium for a
> quarter the price of Red Hat and gotten better assets if that is the
> strategy.

So I guess the question is... why didn't they?

~~~
pm90
Because they tried and failed.

~~~
djsumdog
They attempted to buy Mobi/Docker? That's pretty sad if your company says,
"We've not going to take this buyout, because we'd rather our platform survive
than take your money and watch you kill it."

~~~
ageek123
I think the parent comment warrants a <citation needed>

~~~
parasubvert
I refer you to the song “No one else was in the room where it happened” on the
Hamilton Soundtrack. Not everything can be cited.

~~~
simonebrunozzi
But then, maybe there was no room. There's no way to believe a random HN
comment on such an important issue just on face value.

~~~
fatherlinnux
+1

------
Havoc
I've been giving this some thought because well who doesn't want to glue
together cloud-y things.

The only version I can see is one that runs on generic nix. i.e. Spin up a VM
on each cloud (and in house) and run a stack on that which software glues it
together. Redundancy of sorts.

...however if that glue actually works I might as well do that with 20 sht
tier providers and let the redundancy cover gloss over it. No competitive
advantage for cloud providers - and each of the cloud's various competitive
advantages are by definition not hybrid-able easily.

Scaling? You're now dealing with multiple cloud's worth of different
approaches to scaling. Good luck scaling that hybrid style in a resilient way.

...and all of this is _just_ VMs. Add the 50 other offerings the average cloud
has all with different scaling, quirks and the hybrid dream is deader than
dead.

~~~
goatinaboat
_Spin up a VM on each cloud (and in house) and run a stack on that which
software glues it together. Redundancy of sorts_

The thing is that using a cloud as a glorified hypervisor for home-baked VMs
doesn’t work economically. Colo or even running a DC is cheaper. Cloud
generally only makes financial sense if you are using the managed services.
And of course the instant you do that you sacrifice portability to a greater
or lesser extent. This is of course deliberate on the part of the cloud
providers.

It makes sense to pick 2 clouds and go all-in on them using their native and
managed services to the maximum. You will need to maintain two parallel
skillsets to do this. Completely forget about any layer that promises to
abstract it, they are all red herrings if not outright snake oil. Whether
that’s IBM consultants, or Terraform.

~~~
parasubvert
This advice is common (usually it’s pick one cloud, pick two at least is a bit
more sensible) but I really am starting to wonder about it being marketing
propaganda of its own.

In one breath we hear that only three software vendors (Google, Amazon,
Microsoft .. maybe DO?) have software worth consuming, and all other software
vendors that ship this stuff “abstracts” them is snake oil... MongoDB
Enterprise... Confluent Kafka... Elastic Cloud Enteprise... Pivotal CF, Red
Hat Openshift, Hashicorp Nomad / Terraform / Vault etc - all of these provide
valuable software that runs on any cloud, and often has a multi cloud control
plane (that’s increasingly Kubernetes based).

let’s never use any of that, and screw the whole software industry for the
cloud vendors because their stuff isn’t just a proprietary veneer of
automation around those products charged by the hour?

on another breath we are told that the cloud providers charge too much for
their VMs. And we think they’re not charging too much for their proprietary
services?

Firstly, Most “managed cloud services” are not “managed” in the traditional
sense. They’re hosted, no different from Dreamhost or a bazillion other hosted
offerings, often with similar tradeoffs. It’s a testament to cloud marketing
that people believe there is something magical about Amazon RDS for your
Postgres instance. It’s a nice automated setup of volume replicated
active/passive Pgsql.

There are many, many other ways to do this with open source or proprietary
software with varying degrees of automation - maybe you don’t care, that’s
fine, but I’m not sure delta between running in a DC/colo vs the EC2 costs is
worth it for some proprietary software bits by the cloud vendors. It’s not
magic, it’s just software.

Similarly to say all abstractions are snake oil is fashionable but also
hypocritical. Kubernetes is on fire lately because it is an abstraction for
your work loads, a universal control plane, and universal cloud API. Is that
snake oil? Serverless (the framework) makes developing on Lambda or other
FaaS’ sane - is it too snake oil? Heroku or Cloud foundry lets you push your
apps and not worry about the plumbing on EC2 or the cloud of your choice (even
on a colo/DC!)

But most importantly: You’re not locked into lowest common denominator (what
does that even mean?) with any of this - you can use any proprietary cloud
service you want...the stuff you don’t care about - the VMs, network and
storage - is the stuff abstracted (and usually all the proprietary knobs like
Azure advanced networking or Google metadata/DNS are all available).

Where is the problem? Are Elastic Beanstalk or Google App Engine really
superior economically and functionality wise?

Terraform is not about the different codebases, it’s about glue code in a
standard language to assemble all these cloud services. Crossplane.io is
trying to do this via Kubernetes CRDs. Would you rather use Cloud Formation
and JSON, really?? I’ve seen some monster CF scripts - they’re hard to
maintain and debug compared to TF.

~~~
goatinaboat
_what does that even mean?_

Let me give you a trivial example: GCP gives you a lot of flexibility with CPU
and memory when creating a VM. Let’s say your workload is ideally suited to
some weird combo, like 5 cores and 13G or something. On GCP that’s what you
provision and that’s what you pay for. AWS and Azure offer fixed sizes, so you
have to round up to 8 and 16 (and pay for it). So if you want to be cloud-
agnostic there’s one cool but very basic feature you just can’t use.

Once you start digging into this stuff this keeps coming up: something that’s
efficient (cheap) in one but not in another means: do I do it the same and pay
more, or do I diverge and accept that I’ve got 2 configurations for this
feature now, and save some money. Multiply this by 1000 special cases and then
you find that trying to make one size fit all is a wild goose chase.

All Terraform really offers is doing this in similar syntax for the subset of
each cloud’s features that Terraform knows about, and extending Terraform
yourself for anything it doesn’t. Yes, I would rather use the native thing for
each cloud, even CloudFormation. ARM Templates and DSC are actually quite nice
once you get used to them!

~~~
parasubvert
The wild goose chase part I see as a major exaggeration.

It's interesting, I use BOSH + Terraform all the time, wherein BOSH exposes
GCP's CPU/memory flexibility, the various Azure NIC/LB/availability set
options, AWS' different disk types, etc. Those differences can be modularized,
so that 95% of your configuration templates are identical across clouds, and
the last 5% maps to specifics.

I'm sure it's not all that different from Terraform w/ modules, though my main
problem with Terraform is that it doesn't constrain you into a "do the right
thing" path, it's too easy to create a mess.

Anyway, IMO these kinds of differences really aren't hard to handle and it's
valid to prioritize cloud-independent configuration if that's what you
want/need. It allows the main configuration and installable software to be
cloud-independent, dramatically easing testing. We're seeing this drive with
the flocking to Kubernetes which enables cloud-independent networking,
storage, and compute.

I think differing opinions on this are normal/fine, but i have to wonder why
the single-cloud proponents use words like "snake oil" as if to completely
discredit a different set of priorities.

------
codec01
This is total bullshit. Pivotal’s stock is $10 now, how the hell does your
“back channel source” claim they have more paid customers than Red Hat? At
Summit Red Hat had 1000 paid customer references. This guy must be short IBM
to put out this kind of crap.

~~~
parasubvert
And Red Hat’s stock tanked due to multiple bad quarters as well. What’s your
point? It’s hard to be a mid-sized ISV these days unless you also own the
hardware or have a massive franchise. Red Hat’s franchise was fading and
OpenShift wasn’t growing quick enough to offset it. Meanwhile IBM needed a
major strategic shakeup.

Red Hat didn’t report OpenShift revenue, it conflates it with JBoss, Ansible,
and all other middleware products.

I have no doubt there are more paying OpenShift customers in quantity, but I
wonder about revenues - Cloud Foundry always was larger than OpenShift, and if
OpenShift surpassed it, that would be indeed news. Cloud Foundry is easily a
$500m software business at Pivotal alone, not counting services.

It’s all peanuts in the grand scheme of the industry so far - which is the
point of this post. What does $38 billion actually buy IBM? A bunch of
$150k-500k annual revenue customers? chairs on a bunch of Kubernetes SIGs?
VMware got that with Heptio for $500m. Mostly it’s the K8s and Linux brain
trust , and maybe Whitehurst as a new CEO in waiting, but that’s a hell of a
price for an aquihire.

~~~
fatherlinnux
Small correction, it's ALWAYS been hard to be a mid-sized software company. We
were constantly talking about the 5 or so companies that reached 5B with
software only. They are rare birds indeed. Red Hat didn't make it without
getting bought... (full disclosure, I work at Red Hat)

------
mathattack
Most large companies don’t trust IBM anymore. RedHat has joined them in
turning license audits into a profit center. Defending unfounded audits is a
large cost of business with both vendors. Hard to imagine many folks trusting
them on journeys with new technology.

~~~
anonoholic
> RedHat has joined them in turning license audits into a profit center.

If a company is using licenses it hasn't paid for, and so isn't entitled to,
why is the vendor the bad guy for catching them out?

Maybe I'm the odd one out here as an individual in paying for the movies I
watch, and the music I listen to; but I would expect a business to pay for the
software it's using, irrespective of your stance on "big media".

~~~
SteveNuts
Oracle makes their licensing model intentionally impossible to be compliant.
It's not just "you run x number of instances you owe us y dollars".

It's "you enabled x feature on your database times y users oh and use this
handy CPU core count chart to calculate how many cores you're using. Oh and
you're running your database in a virtual machine with a clustered hypervisor
so you owe us for every cpu core in your cluster".

Then they tell you how much they owe you but "it will all go away if you
migrate some of your stuff over to our 'cloud'" and the process starts all
over again in 2 years, or less.

Fuck Oracle.

~~~
curt15
Any other companies set their licensing structure like they are laying
landmines?

~~~
dx87
I've heard Microsoft's is pretty complicated, they even have a certification
exam to prove you understand their licensing.

[https://www.microsoft.com/en-
us/learning/exam-70-705.aspx](https://www.microsoft.com/en-
us/learning/exam-70-705.aspx)

~~~
jm4
It hasn’t been that bad for me. I give them an updated user count and tell
them what else I’m using once per year and they give me a bill. They’ve never
pushed back on anything. We start with a conference call, I send over a
spreadsheet and that’s it. They have software I can run on my network, but
they have always let me give them the numbers from my asset tracking system.
Frankly, they’re one of the easiest software vendors I deal with.

~~~
fragmede
"User count" sounds so simple when you put it that way. That spreadsheet isn't
trivial to build, and the situation on what's in it may be foreign to some
readers here (it was to me).

A Microsoft shop needs licenses for each laptop/desktop running windows, but
in an office using Microsoft Server to operate its LAN and the requisite
services - DNS, DHCP, SMB file sharing, VPN, email, etc - basically any device
that touches the Windows Server machine needs a Client Access Licences (CAL),
which is available in user-based and device-based flavors.

Let's say the company operates a website and has developers. The
development/QA environment requires an (expensive) MSDN account (or whatever
it's called now) per-developer. In production, unlimited
anonymous/unauthenticated users are allowed to hit IIS (web server).
Authenticated access by employees to IIS needs a user CAL, authenticated
customer access requires an External Connector (EC) license. But don't worry,
the backing MS SQL Server database for the website _also_ needs to be
licensed, with per-cpu-core-per-machine licensing available. Except
everything's a VM theses day, so the servers sit on top of a VM host
(Microsoft Hyper-V), so there's some additional licensing intricacy there to
deal with.

On top of that, there's the Services Provider License Agreement (SPLA)
licensing model available for ISVs, but OEM licenses cannot coexist wth SPLA
licensing on the same system (VMs + host).

Just to make it more fun, different Microsoft reps will have different answers
on how some of the more subtle intricacies even apply!

[https://www.microsoft.com/en-us/licensing/product-
licensing/...](https://www.microsoft.com/en-us/licensing/product-
licensing/client-access-license)

[https://www.microsoft.com/en-us/licensing/licensing-
programs...](https://www.microsoft.com/en-us/licensing/licensing-
programs/spla-program)

~~~
jm4
I don’t know. I don’t think it’s that bad. I don’t put together the
spreadsheet from scratch. Been doing it a long time though. We start with what
I had last year. I just have to fill in my numbers for each license. Then they
come along and tell me I need an external connector because I’m doing this or
that. I groan a little bit and pay.

They’re pretty easy because you only have to do it once a year. It drives me
nuts when a vendor wants me to manage individual licenses as people are coming
on board. I end up having to keep extras on hand. At least let me reconcile
quarterly or something. It’s even worse when each seat has its own key.

Microsoft makes the license management and reconciliation so easy. The only
negative about their licensing is they double dip with the desktop OS and CAL
stuff.

------
Topgamer7
Hug of death, here is cached version:
[http://webcache.googleusercontent.com/search?q=cache:R4qm2iW...](http://webcache.googleusercontent.com/search?q=cache:R4qm2iWPxwIJ:www.platformonomics.com/2019/07/a-very-
cold-take-on-ibm-red-hat-and-their-hybrid-cloud-
hyperbole/+&cd=1&hl=en&ct=clnk&gl=ca&client=firefox-b-d)

------
nickpsecurity
The best explanation I read was that IBM has bet the farm on Linux as a major
dependency, Red Hat was a major contributor with successes they couldn't
achieve, and IBM basically internalized a dependency on Red Hat to be in
control with maybe other benefits down the line. Now the biggest, two
contributors to Linux are the same company. I could see them doing a huge deal
just for that.

~~~
JesseObrien
I don't disagree that they're a major contributor to Linux itself, however
RHEL usage is plummeting over the last 5 years as stated in the article. Being
a contributor and owning RHEL is really no advantage at this point.

~~~
altmind
Redhat profits were growing for 4 years steadily 15-20% for each of last four
years. I dont see the confirmation of redhat usage declining, more like very
perspective and growing company.

[https://www.macrotrends.net/stocks/charts/RHT//revenue](https://www.macrotrends.net/stocks/charts/RHT//revenue)

[https://finance.yahoo.com/quote/RHT/financials?p=RHT](https://finance.yahoo.com/quote/RHT/financials?p=RHT)

------
wearsaredhat
AT&T sees it differently.

IBM snags AT&T as client in new cloud deal worth ‘billions’

[https://www.cnbc.com/2019/07/16/ibm-signs-new-cloud-deal-
wit...](https://www.cnbc.com/2019/07/16/ibm-signs-new-cloud-deal-with-
att.html)

“As part of the agreement announced Tuesday, AT&T will use Red Hat’s open-
source platform to manage workloads and applications and “better serve”
enterprise customers.”

~~~
nixgeek
They also did a deal with Microsoft so not sure what to make of this.

[https://www.cnbc.com/2019/07/16/microsoft-wins-
multibillion-...](https://www.cnbc.com/2019/07/16/microsoft-wins-multibillion-
dollar-cloud-deal-from-att.html)

~~~
tallanvor
Well, the Microsoft deal includes M365, so that's Windows, Exchange Online,
SharePoint Online, and such. There's probably Azure credits to move some
employee-centered services into the cloud and more easily interface with
AD/AAD.

On the IBM side, I can imagine they focused on pushing more of the back end
systems into IBM's cloud. Possibly some of the monitoring and management
systems for AT&T's hardware, and to make it easier to deploy systems for
enterprise customers that don't require dedicated hardware.

Edit: this is obviously speculation. But based on the news articles I've read,
that's what makes the most sense to me.

~~~
Sylamore
I'm saying the news articles are focusing on the wrong stuff compared to what
we're actually doing internally. The news articles are PR pieces that don't
outline the actual strategy in play.

M365 was already in place, that's not new at all every employee already had
access to those capabilities.

IBM is basically taking over the internal cloud stuff that's not AIC - e.g.
vmware and all of the employees that go with it and all the bare metal system
support too.

------
spydum
It seems to me technology goes in cycles, and while cloud has had a meteoric
rise to dominance, if the pendulum swings back to self-hosted - IBM is now
poised to own a substantial part of big enterprise data center technology. I
do think at $34B it's a huge gamble, but as the author said, what other choice
did they have? They aren't exactly centers of innovation any more (either of
them.. and yes, some innovation comes out of redhat, but lets be honest, it's
been tapering off for years now).

~~~
tyingq
All AWS, Azure, and Google would have to do to respond is offer cut-rate
VMware hosting.

There isn't a ton of moat in selling the lowest common denominator. I don't
know that IBM has much lead on the other side either, from Rackspace, for
example.

~~~
meddlepal
Azure already can run on-prem with Azure Stack.

~~~
fragmede
AWS's "on-prem EC2" is called Outposts

[https://aws.amazon.com/outposts/](https://aws.amazon.com/outposts/)

------
Merrill
How did the author not quote the metaphor "tying two bricks together won't
make them float"?

~~~
kitd
Just to be "that guy", concrete hulls are a thing ;)

[https://en.wikipedia.org/wiki/Concrete_ship](https://en.wikipedia.org/wiki/Concrete_ship)

~~~
SahAssar
It's about the shape, not the material.

------
someguydave
RHEL will be around for a long time because the government demands something
like it. All the other businesses stacked around it are dubious prospects at
best.

~~~
windexh8er
While not untrue it would have been far more brilliant for a defense
contractor to buy RHEL.

~~~
someguydave
IBM is a defense contractor.

~~~
windexh8er
IBM is generally a _subcontractor_ to a prime. They are rarely a prime. IBM
doesn't compete in fed at the level Lockheed or Raytheon, for example, do.

------
ilaksh
So basically its like a beach party where they have a bonfire and burn massive
stacks of cash. How do the people organizing this not know what they are
doing? Or is it like, any kind of large bonfire is good for their careers?

------
privateSFacct
Maybe they should of hosted their "cold take" on the IBM hybrid cloud?

~~~
maldeh
How would hosting the site partially on-prem make things better?

Or do you mean "multi-cloud"?

------
djsumdog
It makes me think of Sears buying Kmart

~~~
SmellyPotato22
Kmart bought sears [1]

[1]
[https://en.wikipedia.org/wiki/Kmart#Headquarters](https://en.wikipedia.org/wiki/Kmart#Headquarters)

------
prirun
My guess is that after the GitHub acquisition, IBM was afraid Microsoft would
buy RedHat to gain more control of Linux. I'm kinda surprised MS hasn't bought
Ubuntu, but there's probably no hurry - we're still in "embrace".

------
mey
Hugged to death and don't see it on Coral Cache or Internet Archive. Anyone
got a cache?

~~~
Topgamer7
[http://webcache.googleusercontent.com/search?q=cache:R4qm2iW...](http://webcache.googleusercontent.com/search?q=cache:R4qm2iWPxwIJ:www.platformonomics.com/2019/07/a-very-
cold-take-on-ibm-red-hat-and-their-hybrid-cloud-
hyperbole/+&cd=1&hl=en&ct=clnk&gl=ca&client=firefox-b-d)

------
alpb
Looks like the website cannot handle Hacker News traffic. Anyone got a mirror
link?

~~~
samridh90
[http://webcache.googleusercontent.com/search?q=cache:R4qm2iW...](http://webcache.googleusercontent.com/search?q=cache:R4qm2iWPxwIJ:www.platformonomics.com/2019/07/a-very-
cold-take-on-ibm-red-hat-and-their-hybrid-cloud-
hyperbole/+&cd=1&hl=en&ct=clnk&gl=ca&client=firefox-b-d)

------
crb002
IBM needs to do a take bids from MS Google and AWS to host mainframes in all
their regions. Go with the lowest bidder and stay relevant.

------
sizeofchar
Ignoring the merit of the analysis, this text if very difficult to read. To
many parenthesis, onomatopoeias and inside jokes. I know the author is well
regarded for many books (I haven’t read any), but I think he has to be more
objective in blog posts.

------
jbotz
Pretty interesting. Probably right. So what's next? After flailing around for
a while longer IBM will be up for sale. Who will be the buyer? That's easy:
Microsoft!

~~~
gvb
Oracle, not Microsoft. Microsoft doesn't need anything they have. Oracle is
already selling their (Oracle-rebranded) version of RHEL plus the Oracle
database business ties in with the IBM mainframe business.

~~~
pmart123
Maybe LBO? IBM still has some assets specialty assets like CPLEX for
optimization where I believe they are the go to solution. I’m guessing if
there was a buyout, some of the assets that could be adopted to a SaaS/cloud
product could be sold off to the big players.

------
zubairq
Full disclosure , I work at Red Hat, but IBM buying red hat is a big deal.
Just go back 40 years and IBM vs Microsoft. Microsoft bought QDos (which
became windows). Now IBM bought red hat, which has openshift and

~~~
PhilWright
QDOS became MS-DOS and not Windows.

~~~
zubairq
Windows only became successful because of msdos backward compatibility

~~~
caspper69
That's impossibly untrue. OS/2 2.0 had better DOS AND Windows
compatibility/stability than Windows 3.1 at the time.

It still got its ass handed to it. Microsoft won because they got the OEMs.

~~~
wilsynet
I used OS/2 2.x, but it needed more memory than Windows 3.1 and on the machine
I had, Windows ran faster even if OS/2 was more stable.

Later I tried Warp, but when Windows 95 came around, it was better too. Less
stable, but better in other ways.

I like this article. It communicates the nuance and complexity of the issues
at the time.

[https://www.google.com/amp/s/arstechnica.com/information-
tec...](https://www.google.com/amp/s/arstechnica.com/information-
technology/2013/11/half-an-operating-system-the-triumph-and-tragedy-of-
os2/%3famp=1)

