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What Will Alibaba Cloud Bring to Red Hat Customers?

Alibaba Cloud, the cloud computing arm of eCommerce giant Alibaba Group Holding Ltd., announced a strategic partnership with the open-source software company Red Hat Inc. in an effort to bring the power and flexibility of Red Hat’s open source solutions to Alibaba Cloud’s customers around the globe. As part of this partnership, Alibaba Cloud joins the Red Hat Certified Cloud and Service Provider program which also includes other public cloud giants such as Amazon Web Services Inc. and Microsoft. Additionally, Alibaba Cloud will offer Red Hat open source solutions, including the company’s flagship Red Hat Enterprise Linux platform, to Alibaba’s global customer base in the upcoming months.

As the premise of the Red Hat Certified Provider Program, launched in 2009,  is to offer Red Hat-tested and validated solutions, prior to joining the program, Red Hat tested Alibaba Cloud and confirmed that the environment would meet the needs of their customers for safe, supported, scalable and reliable infrastructure deployments at a consistently high standard.

One of the benefits to come with the partnership is that Red Hat’s customers will be able to move existing on-premises but unused Red Hat subscriptions from their datacenter onto Alibaba’s cloud free of charge through Red Hat Cloud Access Program, which allows users to move all benefits of their subscriptions transfer to the specific certified cloud providers by maintaining their direct relationship with Red Hat throughout an Alibaba or hybrid cloud deployment. The partnership will essentially provide Red Hat customers with greater flexibility and more choice in infrastructure design.

Mike Ferris Weighs In On Their Partnership with Alibaba Cloud

To go more in depth on the benefits of this collaboration to Red Hat customers and the open-source company, I touched base with Mike Ferris, vice president for technical business development and business architecture at Red Hat. Speaking to CMS-Connected, Ferris first explained why this partnership is important from the customer perspective: “As our customers have requested choice in deploying their applications to multiple platforms, they have also requested that Red Hat partner with those cloud providers who both service their infrastructure needs, but also provide significant value to their business challenges in extending their environments from on-premise to the hybrid cloud.”   

“Additionally, as our customers look to Red Hat to help them optimize their existing IT, integrate their applications, data, and processes, add and manage cloud infrastructure, and even build new and modern applications, they have repeatedly requested that Red Hat and Alibaba work together to provide both infrastructure and application services to help lead and solve their most challenging problems.”

When it comes to what Red Hat will gain from this partnership, here’s what he told me: “By becoming a Red Hat Certified Cloud and Service Provider, Alibaba is joining a group of technology industry leaders who offer Red Hat-tested and validated solutions that extend the functionality of Red Hat's portfolio of open source enterprise IT solutions. The announcement expands the reach of Red Hat’s offerings across the top public clouds globally, providing a scalable destination for cloud computing and reiterating Red Hat’s commitment to providing greater choice in the hybrid cloud.”

Open-Source Technology Expands Its Footprint Into the Asia-Pacific Region  

According to the vendor’s financial results for the fiscal year 2016, Asia-Pacific saw year-on-year revenue growth rate of 11.3 percent, compared to 18.4 percent in the Americas and 6.3 percent in EMEA. However, the company claims the only reason that its Asia-Pacific market couldn’t bill the fastest growing region, Japan, is its market is already mature. On the other hand, considering China is where Alibaba is the largest public cloud provider, this partnership is expected to keep up Red Hat’s ongoing momentum in growth, and, ultimately, it will help the software provider boost revenue generated from the Asia-Pacific region as so far, the region has brought the smallest revenue contribution, comparing to EMEA and the Americas.

In 2016, Forrester released results of a global study conducted in partnership with Red Hat by surveying 455 executives across nine markets in the Asia-Pacific region including Singapore. According to the findings, 50 percent of IT decision makers in Asia-Pacific believed open source could help their organization support new capabilities, while 60 percent said it would enable their company to engage an ecosystem of innovative partners. Additionally, “as enterprises in China, and throughout the world, look to modernize application environments, a full-lifecycle solution by Red Hat on Alibaba Cloud can provide customers higher flexibility and agility,” said Yeming Wang, deputy general manager of Alibaba Cloud Global. With all this obvious interest waiting to be satiated, it is a no-brainer to understand why Red Hat is trying to conquer that region through Alibaba.

Besides a sizeable potential clientele in that specific region, let’s look at another favorable reason that backs up Red Hat’s move of teaming up with Alibaba Cloud. The success of Red Hat’s strategy of offering its products and services on major public clouds has already been proven during its fiscal second-quarter earnings call. The vendor revealed that revenues from on-demand RHEL via public cloud partners had exceeded a $200 million annualized run rate, and was growing twice as fast as the company’s overall businesses. With this in mind, adding Alibaba Cloud to their cloud deployment options will most likely come to fruition in no time.    

Speaking of Q2, Alibaba Cloud held 2.6% of the global cloud infrastructure services market in Q2. Although the company fell well behind market leaders Amazon Web Services and Microsoft Azure, it still gained on Google’s third-place standing at 5.9%. It is also worth noting that Alibaba announced its cloud business crossed 1M paying customers and brought in $359M for the quarter in August. Its customers include CITIC Group, China Huaneng Group, and PICC Finance.

My POV

This partnership represents a typical win-win situation. Red Hat will be able to bring more choice and flexibility to its customers while expanding its global presence and generating a new revenue stream. Alibaba Cloud, on the other hand, will strengthen its hand to have a leg up on the competition against the market leaders, AWS and Azure. By the look of it, Red Hat’s strategy has been working so far and giving its customers with on-premise Red Hat subscriptions the option of moving to Alibaba Cloud without cutting ties to the US open source software vendor will likely top off an exciting year for the vendor.
 

Venus Tamturk

Venus Tamturk

Venus is the Media Reporter for CMS-Connected, with one of her tasks to write thorough articles by creating the most up-to-date and engaging content using B2B digital marketing. She enjoys increasing brand equity and conversion through the strategic use of social media channels and integrated media marketing plans.