Published: Mon, October 29, 2018
Markets | By Josh Butler

IBM buys open source biz Red Hat in £26.5bn mega

IBM buys open source biz Red Hat in £26.5bn mega

Presumably the acquisition will have to jump various regulatory hurdles before it is set in stone.

IBM has hailed the agreement as the most significant tech acquisition of 2018, while CEO Ginni Rometty said the move "changes everything about the cloud market".

IBM says it will acquire North Carolina-based open-source software company Red Hat in a $34 billion stock deal.

IBM announced Sunday that it has struck a deal to acquire the cloud-software company Red Hat for $34 billion. "The next 80 per cent is about unlocking real business value and driving growth". While things are all status quo for now, big companies do have the tendency to pull the rug from under such projects which, compared to other open source software, often need more resources to serve a large user base. I'm sure I am not alone is fearing that IBM could ultimately ruin Red Hat and its offerings.

The two companies said IBM intends to keep Red Hat's headquarters in Raleigh, where Red Hat has more than 2,000 employees. Since Linux is the preferred operating system when it comes to cloud computing, it makes sense for IBM to join hands with Red Hat and strengthen its enterprise offerings.

The acquisition, IBM's biggest so far, will provide open approach to Cloud, featuring unprecedented security and portability across multiple clouds, a joint statement said late Sunday. In particular, they said they are committed to open-source efforts as Patent Promise, GPL Cooperation Commitment, the Open Invention Network and the LOT Network. These innovations have become core technologies within IBM's $US19 billion hybrid cloud business.

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The two brands also re-affirmed that the open-source nature of Red Hat will be maintained, and codes will still be contributed to the community.

The announcement comes as tech giants are betting that more companies and users will pay a subscription fee to store their data elsewhere, rather than buy expensive mainframes and hard drives - which had been IBM's bread and butter. "This is the next chapter of the cloud".

Venero's message for IBM CEO Rometty: "The simple message for Ginni Rometty is, 'Don't forget the channel partners who helped bring Red Hat to the level that it is today in enterprise accounts'". "It requires shifting business applications to hybrid cloud, extracting more data and optimising every part of the business, from supply chains to sales". Moreover, he said, "IBM immediately bolsters its position in today's multicloud world".

Adhering to the adage of not fixing what's not broken, Red Hat will continue to operate as a separate unit. "In doing so, IBM will support open source technology wherever it runs, allowing it to scale significantly within commercial settings around the world".

Red Hat said it was the biggest involving a software company. The companies expect to complete the acquisition sometime in the second half of 2019.

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