Corporate Influence

ralphbsz

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(Warning: Opinions coming up).

I actually disagree. RedHat is not a big cloud provider. They neither have the necessary cloud data center capacity, nor the breadth of services that are required today. The 400# gorilla in this market is Amazon AWS. Look sometime what they have: data centers in every corner of the planet, extremely good networking, super-efficient custom hardware, and all kinds of software. One thing I've been particularly impressed with is the content delivery (streaming) platforms they provide, and the cloud-scale and NoSQL data bases. They can do what Oracle dreams of, at a scale 1000x larger than what an Oracle database can possibly do, and do it efficiently (with low CPU and RAM and network utilization). They are what the IT industry needs today, and what everyone tries to compete with.

What does RedHat have? An OS, and a few optional software components. And a large support organization: if your Linux machine crashes, and you were running RHEL and paid for the annual service contract, you get a friendly but not technically very skilled person on the phone, and they'll tell it to powercycle it once, and then reinstall it. They could also kiss it and make it feel better, it wouldn't be much worse. This is the bread and butter of RedHat's business model: phone support for rent. Admittedly, they also have a lot of high-powered FOSS developers on their staff, but it is not clear how you make money with that.

What does IBM have? They are a great computer services company, and I say that being proud of a long and successful career there (I left IBM a few years ago). Unfortunately, they thing they are good at, and used to make a lot of money with (which is to deliver tailor-made computer services, complete soup to nuts) is no longer a money making machine, and that market is shrinking rapidly. They pretend to have artificial intelligence, cloud, the internet, and all that stuff, but those are fundamentally lies: at its core, IBM is still a very customer-focused IT building organization. Some of it is today actually cloud based (IBM both provides clouds using its own data centers, as well as helping large customers run in-house clouds), but that's not important; what is important is the high-touch high-trust business model.

Now you take those two companies and smash them together. You will have large losses, because you have too much management, and very different cultures. And while they are "complementary" (there isn't much overlap), there is very little there that can be used in today's computer marketplace. I can over-simplify it: Neither of them was able to compete with Amazon AWS by themselves, for lack of relevant technology, relevant innovation, sufficient scale, and suitable culture. Putting them together won't help either.

I like to compare it to the merger of HP (at that time, mostly a desktop and laptop company, with a printer business and a small enterprise and services part) with Compaq (exact same description, except fewer printers and more servers). Both were people floating in the ocean after a shipwreck, unable to swim, and slowly sinking. How does putting them together help? Well, it doesn't, and it didn't work: The combined company continued sinking, until new management stopped the bleeding by fragmenting it; todays smaller and focussed companies may actually survive.

So why did HP's management merge with Compaq? Why is IBM merging with RedHat? I think at the core is exactly the same logic: Everyone knew back then that HP was failing, and that IBM is failing now. Everyone (namely the investors and the public) was putting the fault squarely at the current management, where it belongs. And by that I don't just mean the one CEO (Fiorina or Rometty), but the whole bench and the corporate culture that creates this management. While the BoD is still in the pocket of the CEOs (in both cases, powerful CEOs have appointed only sycophants to the board), the investors are slowly getting impatient. In both cases, there was serious talk about the CEO being about to be fired, for the ship sinking ever faster, but with a sycophant board the firing is delayed. So how does the top management save their ass? They can't, because at the core the companies they are leading are incapable of surviving in their current form, with the current management culture. But they can buy themselves a few year delay of the inevitable firing, but doing something really big and really crazy. Because after something YUUUUUGE like the Compaq or RedHat mergers, the current management needs to be given two or three years to see how it succeeds. I think they're just irrationally happening that a miracle happens now. In both cases, I think those ill-advised mergers will break the companies even further, and make the recovery afterwards even harder. And since I have many friends that worked at HP at the time (I'm also a former HP employee), and who work at IBM now, this makes me sad.
 

Crivens

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ralphbsz What you write reminds me of this fungus that infects ants and drives them to suicide. The bigger the company bureaucracy, the more toxic becomes the C level...

I once had a psychological study about the profiles of long term inhabitants of #9 and those dwelling a certain crown owned habitat "to her majesties pleasure" (iow : for ever). Seems like the makeup of high profile career politicans and same level criminals is the same (high functional sociopath). C level seems no different. Let's sink this company and some more, so we can get our wonga some month longer.

In the end, they all sell know how and experience. But that is bound to people and not a company. So lets see how much of it rubs off before those holding it call it a day.
 

kpedersen

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I remember reading about this "memo" sent around IBM when one of the upper managers was visiting. It is talked about on the register.

Was this really the case? That kind of corporate "worship" must be quite suffocating and unproductive. I possibly would contribute this culture to why IBM hasn't really managed to ignite the passion of its developers since the golden age.
 

ralphbsz

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We had CEO visits several times. While we never got a memo about "inappropriate behavior", the level of preparation sounds about right. For about a week before the visit, facilities groups prepare things: carpets are steam cleaned, hallways repainted, and so on.
 

Crivens

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In the south of Berlin there is a road where all buildings were in good repair up to around second floor - exactly as much as you could see from a limo driving you from the politbureau to your datscha... sounds familiar?
 

CraigHB

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Kind of drives home the point, doesn't matter how good things ~are~, matters how good they appear to be.
 
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