There can be little doubt that IBM’s $34 billion acquisition of Red Hat was once of the deals of the decade when it passed in July 2019. Combining Red Hat’s extensive order book in the telecoms space, with the sheer size and scale of IBM seemed to be a match made in heaven.
And so it has proved to be, with the newly acquired Red Hat announcing a plethora of deals to help telcos digitalise their networks at the recent Red Hat 2020 Online Summit.
CommsMEA spoke with Werner Knoblich, senior vice president and general manager for EMEA at Red Hat to discover how the merger with IBM was helping the company go from strength to strength.
With its focus on Open Source network solutions, Red Hat began life as something of an industry innovator and disruptor. Fast forward to today and it is one of the biggest providers of open source solutions to telcos and businesses in the entire world. So, how will the company go on innovating and disrupting the industry, particularly here in the Middle East region?
“Being at the heart of the fourth industrial revolution, the telecoms industry is embracing open source in an effort to enable faster moving development efforts and rework legacy processes. Whether it's connected IoT devices or mobile entertainment, the modern economy runs on the Internet,” Knoblich explained.
“On the other hand, global events have shifted our world overnight, turning most of our connections virtual. And the need for the network services that telcos provide has never been greater. Our technologies are built on open, standards-based frameworks that help them create a modern network infrastructure. With our rich ecosystem of certified hardware and software partners, communications service providers (CSPs) have more choice and greater control of their future.
“Whether enterprises are looking to automate their networks to scale faster in order to meet increasing capacity demands, limit outage risks, or get their teams ramped up on necessary skills, Red Hat will be here to help.”
While Red Hat was a firmly established player prior to its acquisition by IBM, the deal has certainly helped the firm to reach the next level in terms of global reach and scale.
“The acquisition redefines the cloud market for business. Red Hat’s open hybrid cloud technologies are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise, and sales leadership in more than 175 countries.
“Together, IBM and Red Hat will accelerate innovation by offering a next-generation hybrid multicloud platform. Based on open source technologies, such as Linux and Kubernetes, the platform will allow businesses to securely deploy, run and manage data and applications on-premises and on private and multiple public clouds,” Knoblich explained.
As telcos around the world look to scale up their fledgling 5G networks, the enterprise sector will be where those telcos begin to see the first returns on their enormous 5G capital investments.
“4G transformed how we use mobile devices and powered the smartphone boom that started in the latter end of the 3G era. While 5G promises to build upon that success, Red Hat maintains it is the enterprise sector where the possibilities of high speed and low latency at the edge of the network will drive use cases that we are only just beginning to contemplate.
“Smart cities, autonomous vehicles, smart energy and intelligent financial services are a few examples of how 5G will change the way society operates in the same way LTE changed what consumers could do with their phones.What unites this disparate group of use cases is the sheer volume of data they will generate and the complexity of processing it. In their search for efficiencies and desire for new applications, companies will want to process these huge amounts of data at very low latencies. Edge computing will satisfy those demands.
“Red Hat is already preparing for the opportunities these verticals will bring by building what it calls and end-to-end vertical approach for telcos which includes sales, partner ecosystem, marketing, services and engineering. Red Hat’s ability to talk the customers’ language means it can quickly establish their pain points and discuss how the edge can transform their businesses in different ways,” he added.
With Industry 4.0 initiatives starting to take shape, telcos are inevitably looking to form closer bonds with software providers and network automation specialists. Around the world a flurry of MoU’s are being signed that will underpin the connectivity that will facilitate a range of revenue spinning solutions and services for telcos.
“Industry 4.0 is where smart, connected, and responsive technologies are merging with environments that are becoming more data-rich, and, as a result, digital disruption to more traditional business models is becoming the norm, not the exception.
“Many people are scrambling to determine how this upheaval will affect not only what they do, but also how they do it. For telcos, return on their 5G investments depends on customers accessing new services and applications as demand for mobile bandwidth continues to grow. To remain competitive, telecommunications companies must cost-effectively expand their network while also improving user experience.
“To capitalise on the 5G boom, providers will need to cost-effectively expand their networks and improve their customer experience. An essential step in doing so is modernising their existing networks to support both legacy 4G with Long-Term Evolution (LTE) and the latest 5G with New Radio (NR) technology. To do this, operators need to evolve their radio access networks (RANs) to be part of a software-based cloud network which can adapt to the myriad requirements and applications of 5G,” Knoblich said.
Undoubtedly, the current Covid 19 pandemic has radically altered the way in which billions of people around the world conduct their daily lives. A plethora of work and study from home initiatives are underlining the critical importance of ubiquitous, dependable connectivity. In order to cope with the sheer scale of demand flooding their networks, telcos are fast tracking their own digitalisation journeys.
“The key challenge we face is the COVID-19 pandemic and how organisations need to accelerate their digital transformation. Companies that are able to use technology to keep going and rethink their business model for the future by fast-tracking digital transformation will be ones ahead of their competition.
“Organisations that fail to take advantage of digital business transformation risk losing market share and industry relevance. To be successful, a proper digital transformation strategy must include all aspects of the IT organisation, including, people, culture, and process, as well as technology. That’s where we come in, Red Hat helps organisations to digitally transform to be able to operate effectively,” he said.
The Middle East and Africa region remains a key area of focus for Red Hat, not least because of its disparate levels of connectivity. In the GCC we enjoy some of the most advanced telecommunications networks in the world, but in the wider Middle East and particularly in Africa, there is still much work to be done in terms of digitalising networks.
“The Middle East and Africa region has demonstrated growth in its share of our business and there are a lot of expansion opportunities. Red Hat has a great reputation for delivering market-leading open source solutions and our expansion within the Gulf countries helps us meet the growing demand for Red Hat solutions in the region. We have a growing customer base in the Middle East and Africa and our regional offices in the UAE and Saudi Arabia enables us to leverage experts with local knowledge to meet new business demands in the region.
Looking to the future, Knoblich is justifiably optimistic about his company’s prospects in the region and further afield.
“I am not an analyst. In my personal opinion, digitalisation is on the rise but the overall IT spending may slow down and we may observe an increase in platform services. Organisations around the world are being challenged to innovate more rapidly, or be disrupted by new players in their markets. Developers need environments which remove barriers to their ability to innovate, but often messaging focuses purely on the middleware layers and upwards.
“To be truly agile, the supporting infrastructure must be open and software-definable. It's not enough to build your next-generation tooling on top of traditional infrastructure. Open standards help ensure infrastructure automation and management works as expected with the modern, open source tooling demanded by today's developers,” he concluded.