WEBVTT

1
00:00:00.291 --> 00:00:03.962
(upbeat music)

2
00:00:07.215 --> 00:00:09.759
- The landmark acquisition of Red Hat,

3
00:00:09.759 --> 00:00:13.263
that is a clear milestone
in IBM's strategy.

4
00:00:13.263 --> 00:00:14.347
What drove that?

5
00:00:14.347 --> 00:00:17.100
- It is, and I'd say it
represented the start

6
00:00:17.100 --> 00:00:19.978
of what we call our "hybrid
cloud and AI strategy."

7
00:00:19.978 --> 00:00:22.605
If you look at IBM before
the acquisition of Red Hat,

8
00:00:22.605 --> 00:00:24.524
it sat in a place where I'd say arguably

9
00:00:24.524 --> 00:00:26.985
it had a few different
strategies running in parallel.

10
00:00:26.985 --> 00:00:28.445
So we had the Watson Health business

11
00:00:28.445 --> 00:00:29.529
in the health care space.

12
00:00:29.529 --> 00:00:31.489
We had a managed infrastructure business

13
00:00:31.489 --> 00:00:35.618
and we had the rest of IBM.
And those different paths

14
00:00:35.618 --> 00:00:37.537
didn't have a logical
connection point often

15
00:00:37.537 --> 00:00:38.997
in the face of a client.

16
00:00:40.123 --> 00:00:42.000
At the same time, there
was this problem emerging

17
00:00:42.000 --> 00:00:44.294
for our clients, and kind
of circa when the thinking

18
00:00:44.294 --> 00:00:48.089
on Red Hat, you know,
circa 2015-16 was emerging,

19
00:00:48.089 --> 00:00:49.424
there was this reality emerging

20
00:00:49.424 --> 00:00:51.926
that clients were finding that they had,

21
00:00:51.926 --> 00:00:53.595
their IT had always run into data centers.

22
00:00:53.595 --> 00:00:55.180
They were getting onto
clouds, but there were clients

23
00:00:55.180 --> 00:00:58.266
that were deliberately
moving onto multiple clouds.

24
00:00:58.266 --> 00:01:01.478
And so there's this path
of increasing heterogeneity

25
00:01:01.478 --> 00:01:03.938
inside the enterprise and
it was creating a real tax

26
00:01:03.938 --> 00:01:06.191
on innovation and operating expenses.

27
00:01:06.191 --> 00:01:08.443
So the combination of, you know,

28
00:01:08.443 --> 00:01:11.321
a company that was
trying to find a strategy

29
00:01:11.321 --> 00:01:14.866
paired with massive
difficulties for our clients

30
00:01:14.866 --> 00:01:17.410
and a technical solution
that actually unlocked value,

31
00:01:17.410 --> 00:01:19.662
because that open source
layer could then be

32
00:01:19.662 --> 00:01:22.957
the abstraction layer that
ran across that heterogeneity,

33
00:01:22.957 --> 00:01:24.375
and Red Hat was the leader in that space.

34
00:01:24.375 --> 00:01:28.588
So I think now you stand
back a few years later

35
00:01:28.588 --> 00:01:30.882
and luckily for us, you know,

36
00:01:30.882 --> 00:01:32.926
a lot of the vectors have
moved in the right direction

37
00:01:32.926 --> 00:01:36.346
so that all those bets that
that acquisition was premised on

38
00:01:37.722 --> 00:01:38.556
really have paid off.

39
00:01:38.556 --> 00:01:41.351
So you take what was, still
is, the biggest acquisition

40
00:01:41.351 --> 00:01:44.771
in the history of software
and now it looks like a steal

41
00:01:44.771 --> 00:01:47.482
with all the benefit it's driven for IBM.

42
00:01:47.482 --> 00:01:50.944
(upbeat music)