Red Hat to add 350 employees in cloud deal with Nokia, sees ‘wide range of new customers’

RALEIGH – Red Hat will add some 350 employees from Nokia after the technology companies agreed on a deal in which Red Hat will “tightly integrate” Nokia’s network applications with Red Hat technologies that primarily focus on the exploding cloud computing market.

The deal means Nokia – a $25 billion a year communications giant – is largely transferring its cloud infrastructure business to Red Hat while moving to embrace Red Hat tech but continuing to support its current customers using Nokia platforms.

Red Hat sees the Nokia deal as an opportunity to secure a “wide range of new customers that come with a stamp of approval from Nokia.”

The deal could mean a boost in cloud revenues for Red Hat, which has seen a slowdown this year. Recent job cuts followed closely on news IBM reported that first quarter Red Hat quarterly revenues had increased 8% – far below recent performances. “Red Hat had been averaging at least a 15% revenue growth, every quarter since IBM purchased it in 2019,” noted financial news site Seeking Alpha.

The move reflects the growing difficulty of managing, developing and supporting multiple cloud platform technologies, noted mobile news and technology website The Mobile Network.

A revenue boost?

Red Hat is one of the world’s leaders in cloud services as part of IBM with revenue increasing significantly since IBM acquired the Hatters for $34 billion in 2019. The primary purpose of that deal was to capitalize on trillion-dollar-plus opportunities in the cloud, IBM said at the time.

Cloud services produced more than $480 billion in 2022 and is expected to reach nearly $620 billion this year, according to an industry estimate. Revenues are forecast to continue to increase more than 14% a year through 2030. In 2020, revenues were just over $100 billion.

Financial terms of the deal were not disclosed.

Nokia says it will be able to offer more cloud solutions, acknowledging “Red Hat as the industry leader in open hybrid cloud [mixing private and public clouds], enabling customers to run any application or workload consistently across any footprint, including on-premises, bare metal [dedicated servers to one customer], at the edge, and in the cloud.”

The Nokia workers will continue product and service “roadmap evolution” and provide deployment services and support to Nokia customers, the companies added.

In explaining the reasoning for the deal a Nokia executive said it is part of the company’s efforts to “rebalance its portfolio” of cloud related offerings while embracing Red Hat technologies.

Two key points of the deal, the companies noted:

Nokia will adopt Red Hat as its primary cloud infrastructure platform to develop, test and deliver Nokia’s core network applications;
Nokia will continue to support its core network applications

Video: Inside the deal

“This agreement further demonstrates Nokia Cloud and Network Services’ continued momentum to rebalance its portfolio,” said Fran Heeran, Senior Vice President & General Manager of Core Networks, Cloud and Network Services at Nokia. “It will allow us to provide customers with our best-in-class core network applications, together with best-in-class cloud infrastructure from Red Hat, a global leader in open source infrastructure technology.”

Nokia, a developer of smartphones, wireless and related communications gear and services, has nearly 90,000 employees worldwide; its headquarters is in Finland. Nokia employs some 10,000 people in the U.S., including data and what it calls innovation centers.

Red Hat has an estimated 19,000 employees although the Raleigh-based software and services company recently laid off some 800 workers. Red Hat is owned by IBM.

The deal was announced late Thursday morning.

The 5G factor

Key parts of the integration involve 5G – the latest wireless tech for networks around the world- and the offering of Red Hat options to Nokia customers.

“Red Hat recognizes the explosive impact of 5G — not only for service providers, but across all industries – with the most exciting developments still to come. 5G is revolutionizing how businesses and people interact with the development of next-generation applications, services and use cases. As part of this partnership, Nokia is offering our multicloud, cloud native infrastructure together with their core networks applications, enabling service providers to capitalize on the 5G opportunity by deploying their 5G networks using Red Hat OpenStack Platform and Red Hat OpenShift,” said Darrell Jordan-Smith, Senior Vice President, Telecommunications, Media and Entertainment & Edge at Red Hat, in a statement.

However, Red Hat also will support Nokia’s own cloud offerings even as it develops “a transition path with Nokia for customers who choose to move to Red Hat platforms.”

The Hatters also will develop, test and deliver Nokia “core network applications” going forward, the companies said. Further, Nokia is to certify a variety of cloud functions on Red Hat OpenShift and OpenStack platforms.

The move will give communications service providers more choices such as from Amazon Web Services, Google and Microsoft – huge providers of cloud services, the companies said.