IBM Closes Its $34 Billion Acquisition of Red Hat

IBM announced today that it has closed its $34 billion acquisition of commercial open source pioneer Red Hat. IBM says it will “preserve” Red Hat’s independence and neutrality and that the two will together deliver a next-generation hybrid multi-cloud platform.

“When we talk to customers, their challenges are clear: They need to move faster and differentiate through technology,” Red Hat president and CEO Jim Whitehurst said in a prepared statement. “They want to build more collaborative cultures, and they need solutions that give them the flexibility to build and deploy any app or workload, anywhere. We think open source has become the de facto standard in technology because it enables these solutions. Joining forces with IBM gives Red Hat the opportunity to bring more open source innovation to an even broader range of organizations and will enable us to scale to meet the need for hybrid cloud solutions that deliver true choice and agility.”

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IBM chairman, president, and CEO Ginni Rometty concurs.

“Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors,” she said. “They need open, flexible technology to manage these hybrid multi-cloud environments. And they need partners they can trust to manage and secure these systems. IBM and Red Hat are uniquely suited to meet these needs. As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come.”

Microsoft may take exception to the term “leading hybrid cloud provider,” but the IBM/Red Hat deal is momentous regardless. It is the third-largest technology acquisition ever, after Dell’s $67 billion acquisition of EMC and Avago $37 billion Broadcom acquisition. And it provides IBM will a second life in the trillion-dollar battle for the cloud, which is now led by Amazon and Microsoft.

IBM’s strategy is exactly what I’ve proposed that Microsoft do: Instead of simply offering a straight-up alternative to the market leader, Amazon AWS, the firm will instead work with others in the marketplace.

“Today people have five to 15 different public clouds and move data between them,” Rometty told Bloomberg. “The platform we are talking about has to run on other people’s clouds too. [IBM will offer the first hybrid multi-cloud platform, providing the glue to connect various clouds together.]  You’ll hear others say hybrid cloud and then only connect their public to their private clouds. Well, that’s not that helpful for a client. It has to be multi-cloud.”

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Conversation 15 comments

  • skane2600

    09 July, 2019 - 12:05 pm

    <p>I've never really understood the added value Red Hat provides over free (as in what the word means in the context of an inanimate object) Linux alternatives. </p>

    • mestiphal

      09 July, 2019 - 12:29 pm

      <blockquote><em><a href="#440673">In reply to skane2600:</a></em></blockquote><p>All boils down to support. I used to sell Red Hat licensing, and ask that very same question. Enterprises can go free, but then they would need an expect to troubleshot everything that happens… or a bunch of them if they have numerous data centers. With Red Hat anybody can call up for 24/7 support</p>

    • waethorn

      09 July, 2019 - 12:48 pm

      <blockquote><em><a href="#440673">In reply to skane2600:</a></em></blockquote><p>Support.</p><p><br></p><p>For those that don't need it but want to use roughly the same software, you have CentOS.</p><p><br></p><p>For those that want software that's more current, there's Fedora.</p><p><br></p><p>All of these are available for desktop, server, and cloud/IoT workloads with varying degrees of support for app containers.</p>

  • Tony Barrett

    09 July, 2019 - 12:46 pm

    <p>Well, I hate to say it, but Redhat, it's been nice knowing you. I fully expect IBM to screw up this acquisition like they've done many others. Redhat's agility, support and product release cycle will now go down the toilet.</p>

    • A_lurker

      09 July, 2019 - 1:37 pm

      <blockquote><em><a href="#440686">In reply to ghostrider:</a></em></blockquote><p>Unfortunately I have to agree with you. IBM has been run by idiots for years and I have not heard of major new product or acquisition that was a long term success in years. </p>

    • waethorn

      10 July, 2019 - 9:31 am

      <blockquote><em><a href="#440686">In reply to ghostrider:</a></em></blockquote><p>Unlike Lotus, Red Hat is going to be run independently.</p><p><br></p><p>fedoramagazine.org/red-hat-ibm-and-fedora/</p>

  • ph-sth

    09 July, 2019 - 1:16 pm

    <p>Red Hat set to become the next Lotus, then.</p>

  • jwpear

    Premium Member
    09 July, 2019 - 1:32 pm

    <p>Can't help but feel a little sad for Red Hat.</p>

  • spacein_vader

    Premium Member
    09 July, 2019 - 4:22 pm

    <p>Red Hat + Big Blue = Purple Hat?</p>

  • MikeGalos

    09 July, 2019 - 6:34 pm

    <p>And that is how "open source" really works with it being a way for rich corporations to get development given to them for vastly less than they'd have to pay actual staff.</p>

    • skane2600

      09 July, 2019 - 9:15 pm

      <blockquote><em><a href="#440770">In reply to MikeGalos:</a></em></blockquote><p>Yes, that's the power of old fashioned "free". Of course Linus is a millionaire but most contributors, not so much. </p>

    • waethorn

      10 July, 2019 - 9:28 am

      <blockquote><em><a href="#440770">In reply to MikeGalos:</a></em></blockquote><p>Um….what?! A huge number of developers of Linux technologies are already Red Hat employees. Red Hat does a lot for open source software that benefits all users, unlike say, Canonical. Several Red Hatters work on KVM, GNOME, libvirt, virtio, Wayland, systemd, and whole slew of other components.</p>

      • MikeGalos

        10 July, 2019 - 10:14 pm

        <blockquote><em><a href="#440896">In reply to Waethorn:</a></em></blockquote><p>Yes. A large number of "open source" products are just commercial products paid for by commercial software companies. That's kind of the point. It's hardly "giving back" or "many eyes". </p>

  • ndwilder

    09 July, 2019 - 7:04 pm

    <p>Wonder what Linus Torvalds thinks of this?</p>

  • urbane yogi

    10 July, 2019 - 1:54 pm

    <p>very nice post</p>

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