⚠ Partners Who List IBM as a RivalLow threat

IBM (IBM) — threat to the moat

IBM's partners own the clouds Red Hat runs on and sell rival products on them, so the neutral strategy lives at their discretion.

A strategy that depends on partners is exposed to their choices. The companies IBM names as strategic partners, Amazon Web Services, Microsoft and Oracle among them, are also on its list of software competitors1. Each sells its own operating systems, databases and container services to the customers that Red Hat also wants.

Growth, 2025 against 2024 (%)+12.9%Hybrid Cloud (Red Hat)+10.6%Software segment+2.3%Transaction ProcessingIBM 2025 Annual Report
Red Hat still outgrows the segment.

The filing puts it neutrally: partners in some areas "may be competitors in other areas"2. In practice the platform owner sets the terms, controls the marketplace and decides which services appear first to its customers.

There is no sign yet of harm. Red Hat revenue grew 12.9% in 20253 and 11.2% in the second quarter of 20264. But the threat is structural: IBM's most important growth business runs on infrastructure it does not own, sold by companies that would rather keep all of the customer's spending.

The partners also compete in the category that grew fastest in the latest quarter. Data revenue, which includes databases and data integration, grew to $1,782 million from $1,499 million5. Oracle, Microsoft and SAP, all named as partners6, sell databases and data tools of their own. Every dollar of that growth came in a market where IBM's partners are its most direct competitors.

The threat is low today. The risk grows if Red Hat's growth fell below that of total Software for several quarters, because that would mean customers were choosing the clouds' own tools over the portable ones.

References
  1. ReportedThe companies IBM names as strategic partners, Amazon Web Services, Microsoft and Oracle among them, are also on its list of software competitors.
    IBM Form 10-K for 2025 - Item 1 business, competitors and strategic partners, Item 1A risk factors, executive officers. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedThe filing puts it neutrally: partners in some areas "may be competitors in other areas".
    IBM Form 10-K for 2025 - Item 1 business, competitors and strategic partners, Item 1A risk factors, executive officers. — FY2025 · publ. 24 February 2026 · source ↗
  3. ReportedRed Hat revenue grew 12.9% in 2025 and 11.2% in the second quarter of 2026.
    IBM 2025 Annual Report (Form 10-K exhibit) - management discussion, consolidated financial statements and notes - management discussion of the Software segment: Hybrid Cloud, Automation, Data, Transaction Processing and ARR. — FY2025 · publ. 24 February 2026 · source ↗
  4. ReportedRed Hat revenue grew 12.9% in 2025 and 11.2% in the second quarter of 2026.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Software segment results and revenue categories. — Q2 2026 · publ. 23 July 2026 · source ↗
  5. ReportedData revenue, which includes databases and data integration, grew to $1,782 million from $1,499 million.
    IBM Form 10-Q for the quarter ended 30 June 2026 - segment results, revenue categories, RPO, the Confluent acquisition and management discussion - Software segment results and revenue categories. — Q2 2026 · publ. 23 July 2026 · source ↗
  6. ReportedOracle, Microsoft and SAP, all named as partners, sell databases and data tools of their own.
    IBM Form 10-K for 2025 - Item 1 business, competitors and strategic partners, Item 1A risk factors, executive officers. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated September 28, 2026