IBM's decision to use Red Hat software as the foundation for its new cloud computing service is the most important endorsement yet for a key new product from the Raleigh company.
"It has a great marquee benefit," said Baird & Co. analyst Steven Ashley. "It has a tremendous amount of marketing appeal."
Technology giant IBM announced Tuesday that it was introducing the cloud computing service for software development and testing by large corporate and government customers. Expected to be available to U.S. customers in the second quarter, it will use Red Hat Enterprise Virtualization software, which was released in November.
Cloud computing allows access to networks of servers over the Internet. Virtualization software enables more efficient use of servers.
IBM's new $362 million cloud computing center at its RTP campus will serve U.S. customers such as PayPal, which is using it to develop payment applications for smart phones, said IBM spokeswoman Jen Knecht.
IBM, which has an estimated 10,000 workers locally, is rolling out a series of cloud computing services focused on different functions, including data storage.
According to IBM, the average large corporate customer devotes an average of half its technology infrastructure to software development and testing, but 90 percent of the capacity typically is idle. Cloud computing can reduce a company's cost, according to IBM.
IBM's decision to use Red Hat software "shows we truly have the next generation of virtualization technology right here," said Scott Crenshaw, vice president and general manager of Red Hat's cloud business unit.
Red Hat has 3,200 employees worldwide, including 650 in Raleigh. Its Linux software is available free, but customers pay for maintenance and support.
"They didn't choose VMware. They didn't choose Microsoft," said Crenshaw, ticking off Red Hat's prime competitors in the virtualization arena. "They chose Red Hat."
Ashley said Red Hat's product has the industrial strength for "heavy-duty, mission-critical" cloud computing that is lacking in competitors' offerings.
What the collaboration with IBM means in terms of revenue is unclear, Ashley said. Red Hat's Crenshaw declined to comment on the financial aspects.
Red Hat has been prospering in spite of the ailing economy. Its revenue rose 18 percent in the fiscal quarter that ended Nov. 30.
