AT&T, IBM build on 20-year history with cloud, networking agreement

Dive Brief:

AT&T Business and IBM inked a joint agreement Tuesday, where Big Blue will serve as the telecommunication company's primary developer and cloud provider operational applications. AT&T Business will also serve as the main software defined networking provider for IBM.
The deal builds off a 20-year partnership between the two companies and arrives one week after IBM's acquisition of Red Hat closed. AT&T's network cloud will rely on Red Hat's platform to manage workloads and applications, according to the announcement.
IBM and AT&T will work on edge computing platforms together, which taps into the growing enterprise demand for increased network speeds connected devices on the edge. AT&T Communications will also use IBM to modernize internal software apps and make way for AT&T Business Solutions' cloud migration.

Dive Insight:

History between IBM and AT&T goes way back. In 1998, AT&T paid $5 billion in cash to purchase IBM's global network business.

As part of the deal, IBM relied on AT&T to run its global networking. AT&T, in turn, tasked IBM with some operations management with its applications and data centers.

Tuesday's deal operates in a similar way as the agreement 20 years ago, building on each company's expertise to grow their respective businesses.

The recent agreement is also a nod to Red Hat services. Now that the acquisition is finalized, industry is looking to IBM for what's next — assurances that the open-source power play will grow IBM's position in a crowded market.

Combining Red Hat's open source technology with IBM's broad client base will allow the companies to take on much larger projects in an integrated way, according to Paul Cormier, EVP and President, Products and Technologies at Red Hat, in an IBM Q&A last week.

A key hurdle is agility. Migrations are complex, requiring legacy businesses to change their approach to technology.

One Microsoft executive says technology spend is about 30% in the cloud. There is room to grow as businesses modernize to remain competitive and as competition in the cloud remains stiff.