Cloud Services / Kubernetes / Sponsored / Contributed

What IBM Must Do to Really Compete in the Cloud

27 Jul 2020 12:38pm, by

Portworx sponsored this post.

Murli Thirumale
Murli is co-founder and CEO of Portworx. He previously served as co-founder and CEO of Ocarina Networks, Inc. He also served as vice president and general manager, advanced solutions group, Citrix Systems, Inc. Murli holds an M.B.A. from Northwestern's Kellogg Graduate School of Management as an F.C. Austin Distinguished Scholar.

Amazon Web Services is the undisputed winner of the Cloud 1.0 wars. But who will win Cloud 2.0, by which I mean the hybrid- and multicloud world? Google and Microsoft are clearly in the running, but so are the major IT platforms that got scooped by Amazon and Cloud 1.0: IBM, VMware, Cisco, HPE, Dell, and others.

In a series of articles in The New Stack, I will look at what each of the major players needs to do to compete and win in a Cloud 2.0 world. Let’s start with IBM, which just released earnings that beat estimates — thanks, in part, to the growth of its cloud business.

IBM has a public cloud, but in the cloud wars with AWS, Microsoft and Google, its public cloud is not what really matters. Rather, IBM has a secret weapon that doesn’t require the same massive capital outlay: software.

The first generation of cloud was all about building out infrastructure, while the second generation of the cloud is about software to manage applications in and across infrastructures. What enterprises really care about are applications, not infrastructure. That means the real value to enterprises now is at the app-management tier, not the infrastructure tier.

While IBM has a public cloud, its more relevant assets are software related: Watson AI products, Blockchain solutions, Cognos, and of course new additions that come on the heels of its Red Hat acquisition. In particular with its acquisition of Red Hat, and its software-driven app management stack, OpenShift, IBM can now punch above its weight in the cloud wars and capture an increasingly larger share of value from customers who would traditionally spend billions with the big cloud providers instead of IBM.

OpenShift marries three assets that IBM can use to win the cloud wars:

  1. High margin software (as opposed to low margin infrastructure).
  2. A sophisticated application management platform based on Kubernetes.
  3. The ability to provide true hybrid and multicloud operations.

This combination driven by OpenShift allows enterprises to easily, quickly and cost-effectively run applications in any environment. While the cloud providers cut prices to attract customers, effectively commoditizing their own services, IBM can take advantage of that and offer a platform on top of other public clouds that allows an enterprise to manage their apps wherever they decide to run them.

None of this is to suggest that AWS, Microsoft or Google will go gentle into that good night, but if IBM is going to compete against the major cloud providers, it has to be on the basis of offering a multicloud app management platform. In fact, even Google is doing the same thing with Google Anthos, suggesting it also realizes that just infrastructure is not enough.

I give IBM an A+ rating on its Red Hat acquisition and OpenShift strategy, but for the time being a C- on execution. Over time, this poor execution could cost IBM billions in lost revenue and shareholder value. An example of the IBM-Red Hat execution stumble is a failure to see the importance of data management in the enterprise, and how without offering a complete data management platform for apps running on OpenShift, massive-scale adoption just won’t come.

According to the GigaOm Research Radar for Kubernetes Storage report, RedHat is listed as a “feature play.” A feature play in this case, as opposed to a “platform play,” means that the product is narrowly focused on storage and is not a broader platform of data services — like backup, DR, security, etc. (which are available through other Red Hat and IBM services). Additionally, while roadmaps change and develop over time, the fact that today Red Hat OpenShift Container Storage is limited to clusters of only nine servers and 108TB of usable storage is an indication that OpenShift is approaching the enterprise sales big leagues from the perspective of a very successful SMB company, not a company capable of competing with the public cloud providers.

Whether through building it themselves, or partnering with a growing ecosystem of cloud native storage providers, OpenShift needs to be able to respond to the desires of the world’s largest retailers, financial services conglomerates, healthcare and pharmaceutical companies, who want to run all of their apps on OpenShift, not just the tiny subset that doesn’t need more than 36TB of storage. I believe IBM can do it. And I am betting that AWS, Google and Microsoft are hoping they can’t.

RedHat OpenShift is a sponsor of The New Stack.

Feature image via Pixabay.

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