IBM is acquiring Red Hat for approximately $34 billion in its largest deal to date. Red Hat, the world’s leading provider of open source cloud software will become a unit of IBM's Hybrid Cloud division.
In a joint statement by both companies, Ginni Rometty, IBM Chairman, President and Chief Executive Officer said, “The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. IBM will become the world's #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses”
Red Hat CEO Jim Whitehurst said, “Open source is the default choice for modern IT solutions, and I'm incredibly proud of the role Red Hat has played in making that a reality in the enterprise. Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience – all while preserving our unique culture and unwavering commitment to open source innovation."
How will this deal be a game changer for the cloud industry?
According to IBM, companies today are using multiple clouds for their workload. But research shows that 80% of businesses have still not moved most of their workloads to the cloud.
IBM’s Senior Vice President Arvind Krishna points out that most of IBM’s clients are only 20% or so into their cloud journey and are eager to move their business applications to the cloud, the next 80%. The reason being for this delay is the security concerns in a multi-cloud environment as well as inconsistent cloud management.
With this deal, IBM and Red Hat will be able address the issue and accelerate hybrid multi-cloud adoption. With their help, clients will be able to create cloud-native business applications faster, drive greater portability and security of data and applications across multiple public and private clouds, all with consistent cloud management.
In doing so, they will draw on their shared leadership in key technologies, such as Linux, containers, Kubernetes, multi-cloud management, and cloud management and automation. Red Hat will bring to IBM the world’s largest portfolio of open source technology, their innovative hybrid cloud platform, and a vast open source developer community.
While the deal may will make them become the world’s leading hybrid multi-cloud provider, it will also be seen as a threat to the other tech giants like Microsoft and Amazon. The $2 trillion corporate computing industry will definitely see more competition with IBM’s acquisition.
As Jim Whitehurst puts it in an email to his associates on the deal, “Open source, open formats, and open standards have not only changed technology; they have also changed our society for the good. Red Hat’s role in all of that cannot be understated. With IBM, we have the opportunity to accelerate this work at a greater scale and show everyone that open really does unlock the world’s potential.”