IBM acquires Red Hat for $34 billion

At the end of October 2018, tech giant IBM made a surprise move and purchased open-source software vendor Red Hat for 34 billion USD. This is the largest deal IBM have made in their 107-year history as well as the second largest tech acquisition of all time!

This week we look at what the future for IBM and Red Hat might be – why they’ve purchased it and most importantly, how this acquisition will affect Red Hat’s end users. The general consensus is that IBM’s acquisition shouldn’t have too many knock-on effects.

Why has IBM bought Red Hat?

Red Hat has almost undisputed dominance of the OpenStack tech market for the enterprise, including OpenStack cloud services. Cloud hosting is a growing industry and Microsoft Azure and Amazon Web Services (AWS) are dominant within the market. IBM could potentially move into the cloud market, perhaps even sizing up rivals to act as a direct competitor to giants like AWS. Former IBM leaders have believed that the company couldn’t do what they do in the cloud. But now with Ginni Rometty at the helm of IBM, they’re undertaking more forward thinking.

IBM’s customers need a hybrid cloud to move their data across multiple cloud environments. And without the expertise of a company like Red Hat, such technology is probably out of reach. With Red Hat’s connection to Linux and understanding of the ever-growing importance of Kubernetes technology, IBM has acquired one of their most useful resources within the sphere of open-source cloud technology.

Red Hat may have been costly, but the potential returns for IBM – with a range of veteran open-source developers from Red Hat on their side – are huge. We’ll have to wait and see if IBM can release a new hybrid cloud powered by Red Hat in the future. But the potential for IBM to move into that particular area and really throw their own hat into the ring is there.

What will change for current users of Red Hat

How will the purchase affect current users of Red Hat technology? The official word from Red Hat is that nothing will change. Red Hat executive Damien Wong confirmed that, despite the purchase, IBM will continue to act entirely independently. We aren’t able to comment on the validity of these claims, but we have faith in IBM. In the past they have tended to allow their acquisitions to continue ‘business as usual’, just with a little extra help from Big Blue. This also means that at the moment, Red Hat partnerships will remain unchanged, meaning that the Tier 2 team can continue all that we do without any hiccups.

The Tier 2 Consulting team can assist with a wide range of development, consulting and training issues. If your business isn’t quite up-to-scratch with enterprise-level Red Hat technology, contact Tier 2 Consulting today.

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