Red Hat’s new CEO on surviving inside Big Blue: 'We don’t participate in IBM's culture. It’s that simple'

Paul Cormier talks hybrid cloud growth and independence with El Reg

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Interview Red Hat’s new CEO is feeling confident. It’s a pretty good time to be the head of a company whose entire business is virtual: virtual machines, hybrid cloud, operating system support, Kubernetes containers. These are boom times.

If there’s a downside for Paul Cormier, it’s that after nearly 20 years with the company he wasn’t able to celebrate taking the top job on stage in front of his staff at Red Hat's annual summit this week. Instead, he’s communicating via webcam from his home office; the conference has gone online-only mid-pandemic.

But, just as with the world outside, there is a lot of flux within Red Hat. Cormier took over from Jim Whitehurst on April 6; Whitehurst is now president of IBM following Big Blue’s purchase of Red Hat for $34bn, a deal completed in July.

IBM also got a new CEO this month, Arvind Krishna, and the first thing he did was tell the world that the tech behemoth’s main focus from now on would be the hybrid cloud; the very department and technology Cormier sits atop.

And so the culture clash between the buttoned-up, bureaucratic Big Blue that lives on consultancies, services, and hardware, and the employee-empowered Red Hat that moves fast and thrives on open-source software – a clash many have warned about since IBM’s purchase was announced in October 2018 – looks as though it is about to hit fast-forward.

Cormier’s position, however, is that there is no culture clash because: “We don’t participate in their culture. It’s that simple.”

Is he arguing that Red Hat can exist entirely separately from its new owner when its products are now that business’s main focus? Well, yes. “In terms of IBM and our strategy, we do our own things,” he told El Reg on Wednesday. “I have my own HR, own legal, own CFO, own IT. We haven’t, and have no, plans to consolidate even our back office.”

Hard times with hardware

We push a little harder. With IBM looking to Red Hat to grow sales and profits, by shifting its vast customer base to the cloud, or picking up new ones in the cloud, what if Big Blue told Red Hat it is, of course, independent but it may want to take a serious look at optimizing for IBM hardware?

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Cormier laughs. “Ain’t gonna to happen. It’s not going to happen. They understand that would disrupt Red Hat’s side and disrupt our partners.” He references Red Hat's announcement this week with Microsoft where the Windows giant will integrate Red Hat’s OpenShift with its Arc software.

“We work closely with Amazon, we work closely with Google. We have to keep those relationships intact and the only way we could do that is by continuing to show our neutrality and our independence. Everybody understands that.”

He answers the obvious next question before we can ask it: “Arvind [Krishna, IBM’s new CEO] understands that. That was one of the driving premises for the acquisition. I live it every day. Not even a hint of it comes through.”

Cormier also notes he reports directly to Krishna, and outlines their relationship as “both understanding the numbers we are trying to shoot for. We agree on the right numbers, what the sales look like and we go off and do it.”

Can Red Hat avoid being assimilated into the IBM borg by bringing in the money? Possibly. What is clear is that Cormier doesn’t give much thought to, nor feel a part of, the larger machine he is now within. “We don’t care about hardware. IBM cares a lot about hardware. We are hardware agnostic.”

He is equally bullish about Red Hat’s free, community-supported cousin of Red Hat Enterprise Linux, CentOS, which may not be the sort of thing IBM sees as valuable down the line. “We’re seeing a lot of take up on CentOS Streams. There’ll be a lot more focus on CentOS Stream; we’re following what our customers want.”

Winning

Cormier appears to believe that when there are any clashes, it will be resolved in Red Hat’s favor. “We don’t for the most part have competing solutions,” he tells us.

“For example, when they bought us, they had their own Kubernetes-based system and in the end they decided to retire it and just use OpenShift. We look at them as a partner. An important partner but they understand that OpenShift will cut into some of the places where they have proprietary products. They totally understand that. We need to go there to stay competitive and we’ll go there.”

Where does this confidence that IBM won’t trample on Red Hat if it impacts its bottom-line come from? Cormier’s relationship with Krishna. “Arvind was a great choice for this. Arvind and I are really the ones that hammered this out before and during the acquisition. And so he totally understands why it’s important for both Red Hat and IBM to have this level of independence.”

We move to the next big question for Red Hat. The company’s enormous success was built on its decision to go all in on a subscription model for its enterprise-grade Linux, which provides 24/7 tech support, expertise, certifications, and so on, to paying customers. The software remains free and open-source; you're paying for on-demand assistance and peace of mind.

How is that going to hold up amid the general move by organizations to hybrid and public clouds, where cloud providers offer their own technologies, from virtualization and storage to containers and orchestration to serverless interfaces, as well as support and expertise? In other words, customers may be tempted to migrate to platforms where everything is integrated, and feel they don't need Red Hat, and its software, anymore.

Cormier sees it all as one big happy family. “The platforms are really, really important. RHEL is a platform. OpenShift is a platform. OpenStack is a platform. But everything else builds around that platform.”

He gives an example of two storage companies that Red Hat bought: “From the beginning the intent was not to go into the storage business to compete with EMC or NetApp; the intent was to have a storage offering that would enable platforms – RHEL, OpenShift, OpenStack – to have a storage layer to allow the application to get at the storage it needed no matter where it lived.”

You get a RHEL! And you get a RHEL!

Red Hat is now bringing in middleware but, he says, “it’s RHEL underneath.” A new demo at Red Hat’s annual summit this week showed how virtual machines, running on a hypervisor, and containers, running on a container engine, could be pulled under the same umbrella. “It’s all sort of tied together,” he explains, adding: “Linux is the foundation.”

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To hear Cormier tell it, a shift to hybrid cloud is not a risk to Red Hat’s revenue model, but a growth opportunity. “Hybrid cloud is going to continue to grow, Linux is going to continue to grow; Linux is the foundation for hybrid cloud so as hybrid cloud grows, Linux grow,” he says. And with all of that, there will be a need for management, automation, and security, which is where Red Hat comes in.

With Cormier stressing that Red Hat will work with everyone – Amazon, Google, IBM, Microsoft, you name it – we ask him to name his competitors. He says most companies in his field are “coopetition” though lists VMware as Red Hat’s biggest competitor, although he doesn’t rate their chances of knocking it off the top spot.

“They’re coming from a legacy world and they’re trying to do their own Kubernetes, which means they’re trying to do their own Linux, which means they’re trying to become a Linux provider overnight – and we have a 16-year head start on them.”

But back to the corporation that now owns Red Hat, regardless of how Cormier sees the relationship, IBM: what is in it for Red Hat?

“They will help us bring our product to places we’ve not been before. We sell in, like, 60 countries; they are in 160 countries. They can bring us into deals we might not even be aware of. We are good at winning over the tech people; they are good at the C-suite.”

If that’s how IBM also sees the relationship working with its new, somewhat unruly step-child, Cormier may be onto something. But you can’t help but wonder whether the old maxim that “culture beats strategy” will be put to the test as the tech industry moves toward the hybrid cloud. ®

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