Former Chairman, President & Chief Executive Officer, IBM
CEO Ginni Rometty: Red Hat's open-source software 'is a play that helps all of IBM'
IBM will unlock growth by expanding its new Red Hat subsidiary services across the globe, CEO Ginni Rometty tells Jim Cramer.
About Virginia Rometty
Ginni Rometty, former Chairman, President, and CEO of IBM, has been speaking about leadership, artificial intelligence, and workforce development. In a 2023 SXSW conversation, she discussed her book "Good Power," which outlines five principles for using power positively. She described her personal background, including her mother's return to community college after her father left the family, as shaping her belief that "no matter how bad it gets there is always a Way Forward." Rometty advocated for a "skills first" movement in hiring, stating that "half the jobs in our country are over credentialed" and that IBM had hired 100,000 people in two years under that approach. She also reiterated her view that AI should "augment Humanity" and be built with "principles of trust and transparency." Earlier in her tenure, Rometty frequently described data as "the world's new natural resource" and argued that cognitive AI would impact every decision within five years. She promoted IBM's "Watson" platform as a tool for domains like healthcare and education, emphasizing that AI systems must be transparent and trained on unbiased data to avoid perpetuating historical biases. Rometty also spoke about the importance of corporate social responsibility, citing an IBM program that grew from a single school partnership to 300 high schools and 150,000 students globally. She has called for public policies that support data movement, skills upgrading, and investment in research, and has stated that companies must balance the interests of customers, shareholders, and communities.
Transcript (10 segments)
✨ AI-enhanced transcript with speaker attribution
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Narrator0:02
Late last year, IBM announced it was buying Red Hat, an open source software company that's a major player in cloud computing. Now, Cramer knows I've been a gigantic fan of this transaction, even though Wall Street has been more skeptical. Today, the Red Hat deal closed early and creates a whole new IBM. This morning, we got a chance to sit down with Ginni Rometty, the chair and CEO of IBM, as well as her newest employee, Jim Whitehurst, formerly the CEO of Red Hat and now a member of IBM's senior management team. Luckily, they were both gracious enough to stick around and answer some more questions. So take a look.
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Interviewer0:43
Ginni and Jim, first congratulations. Ginny, I'm going to go right to it. I think a lot of people got used to an IBM that bought back a lot of stock, an IBM that raised the dividend, but an IBM that didn't really have the top-line growth that so many investors want. What will Red Hat do for top-line growth?
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Virginia Rometty1:02
Well, in numbers, what Red Hat does is 200 basis points of growth, five-year CAGR. But more importantly, just think of the opportunities of where you can grow now. For one, together we have the leading platform for the hybrid cloud. That means it runs not only on the IBM cloud, not only on-premise and private clouds, it runs on every other public cloud out there. So whether that's Amazon, Microsoft, Google, whoever it is, it now runs on those as well. So that extends our reach into those clouds. Jim is in a certain number of countries, tens of dozens of countries, but not in 175 countries. So we grow by expanding Red Hat that way. Then the other way is we take all of our IBM software and we make it run the best on Red Hat, and wherever that runs, it can run. So there's a chance to expand market for IBM, extend reach for Jim. Go on to wherever it runs on every public cloud. And then don't forget we have a services business. So we've been over the last eight months working with them on journey to cloud for all of our clients to put in the hybrid cloud, and they've got a whole set of suite of offerings that they're rolling out. So it really is a play that helps all of IBM as well as extends what Red Hat's done, and together we make it even better.
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Interviewer2:14
All right, so Jim, let me ask you about the last eight months. There were people who felt Red Hat has maintained an entrepreneurial culture. I've been following you for a long time. Is the entrepreneurial culture of Red Hat able to be maintained within the large confines of a great American company, a worldwide company that has a storied reputation but is not necessarily known as entrepreneurial as Red Hat is?
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Jim Whitehurst2:40
Yeah, I think this is one of the things that's worked really well over the last eight months. We've got to know each other better. And that's simply because I think everyone at IBM that I've worked with understands that Red Hat is a capabilities-based company, and that capability is tied up in our culture, our ability to go from open source project to project to project and be a leading provider against those. So what we talked about is this isn't two cultures coming together; this is two cultures working together to be able to create something unique that we couldn't before. And so throughout all of our interactions, I think there's a real understanding that the diversity of the two perspectives and cultures and backgrounds actually allows us to do more than we could do otherwise. And I think both sides are very, very sensitive to that. So we both have strong cultures that have helped us both be successful, and we really think those can work together. We can celebrate the benefits of both and how we can best work together going forward.
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Interviewer3:41
Ginni, one of the things that worries me about the deal, and be candid, is VMware, a very aggressive company really tied in with Amazon. Some of the people there have said, look, before you get too excited about the deal, remember Amazon is really a competitor of IBM. How do you answer the questions that say this is a cultural change for IBM, which likes it its way, and it's now going to be far more collaborative?
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Virginia Rometty4:07
Yeah, no, this is absolutely about being multi-cloud. And you mentioned VMware. Despite every other thing out there, IBM has done more porting of VMware to the cloud than anyone else into the IBM cloud. So there is more running in production on the IBM cloud. But when it comes to Jim's platform, and part of why that unit should stay distinct, is we will absolutely provide the best platform running on every other cloud out there, because our clients want one platform that transcends all of this. So Jim, that's why we grow as those other clouds grow, we grow as our cloud grows, we grow as clients put in private clouds. I think that is for IBM and our clients the best of all worlds. And so on one hand they're partners, on the other hand we'll compete appropriately. But you also remember I have a big services business. They do multi-cloud work. Every client has 5 to 15 clouds. That's why this isn't winner-take-all. This will be managing these kinds of environments, and nobody does it better than us.
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Jim Whitehurst5:06
Yeah, just to emphasize that, Jim, you know VMware is a big partner of ours. A lot of our software runs on VMware, whether that's Linux or OpenStack, same with the clouds. So we compete and we partner across all of these. How this creates value is accelerating our clients' businesses, and that creates more value, creates more spend for all of us. And so, you know, when I talked to Microsoft or Amazon, they're excited about this because they say, hey, if more workloads are running on OpenShift, OpenShift runs on my cloud, that gives me a greater growth opportunity. So this is about growing what technology can do for our customers, and that ultimately is good for all of us. And certainly we compete at different areas, but if it's a growing pie, that's ultimately good for all of us.
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Interviewer5:49
Let's leave it at that. I think this is a transformational acquisition. I think those who underrate it don't follow either one of you. I've been fortunate to be able to follow both of you since you came in. This is a new IBM. It is the same Red Hat grafted onto a new IBM, and I think it's going to be very, very exciting. I want to thank Ginni Rometty, CEO of IBM, Jim Whitehurst, former CEO of Red Hat and now an executive at IBM. Thank you so much, guys. Appreciate it.
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Narrator6:15
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