It’s Christmas early for IBM as they put on a Red Hat

Digital sovereignty


It’s official, IBM is acquiring RedHat, the open-source software company. Although the deal will only be closed in 2019, IBM’s strategic – and costly – move will help the company catch up on cloud computing.

Lagging in the clouds

Cloud computing has already made its way into numerous businesses. But it is only the beginning and the potential for cloud computing companies is huge.
The problem is that these companies have already become giants, difficult to overthrow. IBM has missed the start of the race with AWS (Amazon Web Services), Alphabet (Google) and Microsoft Azure. If IBM were to try and step in now, with the same services, it would be bound to fail.
Acquiring Red Hat is another way to join the party and a rather clever one.

Why is Red Hat interesting for IBM ?

Red Hat is a leading open-source company offering dedicated solutions to businesses. They already are a top player in the cloud computing game with Hybrid Clouds and multicloud.
With many solutions coming from different providers, businesses come to rely on more than one cloud solution. This is the multicloud and it requires a “governing” solution to make all these clouds operate smoothly together.
Some rely on both private on-premises clouds and public clouds. It’s the hybrid clouds.
Red Hat is the world leader in hybrid cloud computing, now making IBM the leader too. Besides, it’s a great opportunity for cross-selling IBM products as well.

IBM’s shopping spree

The year 2018 has been rather expensive for IBM. Buying a ticket to hybrid cloud/multicloud leadership come with a dear price tag. IBM will spend $34bn to acquire Red Hat. This makes it to the top 3 of the most expensive tech acquisitions in history.

What is free is rare and what is rare is expensive…

… So what is free is expensive. Such sums might seem overwhelming for open-source companies. But that would be forgetting that open-source doesn’t mean free. If Red Hat relies on a Linux distribution, but it has developed paid plans for development and support within the enterprise community. Its expertise in managing multiple cloud solutions has paved the way for IBM’s lust.

Concern among the open-source community

There were voices of concern earlier this year as GitHub joined Microsoft. And the same concerns are heard now, even from Red Hat employees. Even though IBM has always been a strong supporter of Linux, some are worried about the possible changes the Red Hat philosophy might undergo.
This concern was not shared by stockholders as the Red Hat stock saw a sharp rise since the announcement.
The management of the GitHub acquisition seems to have gone rather smoothly. Now IBM should now do the same to cozy up to open-source advocates worldwide.