International Business Machines Corp (IBM) has finally acquired Red Hat to boost up its cloud computing business. The deal is worth $34bn, IBM said on Tuesday.
Red Hat is IBM’s biggest ever acquisition yet and marks a significant move towards its investment in cloud computing. IBM is over a hundred year old and operational in over 170 countries.
Red Hat acquisition in line with IBM CEO’s vision
Ginni Rometty since taking over as the CEO in 2012 has marked a shift in the company’s strategies. IBM under her leadership is looking at faster growing segments like cloud computing, software and other IT services. It’s a huge shift from the company’s traditional hardware investments.
IBM has long been one of the top producers of computer hardware but the advent of a host of devices has rendered the business less profitable. The challenge though for Rometty has been their old investors. IBM, a big name in hardware is entering into software department but investors are sceptic.
.@IBM is one of our oldest partners. They saw the value in #opensource early & invested in it often. Their investments yesterday, today, & tomorrow allow #RedHat to accelerate our mission. Hear from @Jwhitehurst & Ginni Rometty at #RHSummit @RedHatPartners pic.twitter.com/l7MhWExEua
— Red Hat, Inc. (@RedHat) June 2, 2019
Rometty has come a long way in gaining the interest of investors testified by this deal. IBM signed up for paying a massive $190 per share for Red Hat’s acquisition in May.
Red Hat – Popular for making Linux
Linux is an open source operating system presented as a direct alternative to Microsoft’s Windows. The company was founded in 1993 by Bob Young and Marc Erving.
IBM who have faced huge challenges in transitioning from old school hardware products to new gen technology is now coming of age. Red Hat though will still work independently under current CEO Jimmy Whitehurst and his team.
IBM and Red Hat are working on a slight niche genre of helping companies bring together multiple platforms. This is a safe and interesting move since they have avoided competing directly with heavyweight cloud services like Amazon Web Services, a unit of Amazon Inc (AMZN.O), Microsoft and Alphabet Inc’s Google (GOOGL.O).