Let's start with Oracle, which is quite frankly a case of strange bedfellows. But the client wants, what the client wants. Oracle may have been caving in to customer demand, says Holger Mueller, an analyst at Constellation Research, who calls the deal a win for both companies.
“For Oracle, it's about giving customers choice. And this allows customers to bring their workloads from Red Hat to Oracle. For IBM clients, it means one more compatible cloud.”
He adds that for Oracle, which has always been very proprietary in the past, this is truly an amazing announcement. ”It's notable because Oracle has its own Linux. The ancient Oracle would not have done this. But perhaps a desire for more cloud customers from him has led the database giant to be more open-minded. According to Synergy Research, although it has been showing growth In recent quarters, Oracle is still mired in low single digits when it comes to enterprise infrastructure market share.
As for SAP, it is moving some of its internal workloads to run on RHEL, building on an existing partnership, according to the company. SAP says it sees the partnership as a way to run modern workloads more efficiently, in particular RISE, its cloud ERP product. The ultimate goal is to help SAP customers operate in a hybrid cloud environment more easily.
The agreement includes having Red Hat product engineers and other technical personnel on site to assist SAP with implementation and interoperability issues. Mueller says that SAP was using SUSE Linux, but that's not as popular outside of Germany (where SAP is based). “For SAP it is different. They used SUSE outside of the German connection (and many German customers using SUSE) but it didn't get anywhere internationally. So this is a long overdue move,” he said.
IBM has been counting on Red Hat to boost its revenue, and these deals have the potential to boost Red Hat's revenue at a time when IBM is counting on it more than ever. In its most recent earnings report last week, IBM declared income of $16.7 billion. That was flat, but certainly better than the negative territory the company lived in for many years, at a time when it reported 22 quarters in a row of negative revenue growth.
For what it's worth, if you look at the numbers in constant currency, which represents the strong dollar for non-US revenue, the number was a more respectable 6%, more in line with the slow growth type but constant CEO Arvind Krishna hopes to achieve over time.
IBM spent $34.000 billion to acquire Red Hat in a mega deal five years ago. The investment has paid off for Big Blue as it continues to grow revenue quarter after quarter. Red Hat, which operates semi-autonomously within the organization, saw revenue increase 10%, which translated to 15% in constant currency in the most recent report.
These new deals have the potential to help further increase revenue in the coming quarters.
