This is the next chapter of the Cloud.
The company will be paying through cash and debt, as opposed to share exchange, but did not specify the proportions. He said the acquisition would give Red Hat greater scale and resources to increase the impact of open source software. Red Hat will become part of IBM's hybrid cloud team as a "distinct unit", with the same headquarters in Raleigh, North Carolina, and its brands. However, research shows that 80 per cent of business workloads have yet to move to the cloud, held back by the proprietary nature of today's cloud market. Hybrid cloud relates to the linking of public and private cloud platforms. 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.
Rometty, 61, has been trying for years to steer the 107-year-old technology giant toward more modern businesses, such as the cloud, artificial intelligence and security software.
The deal comes just two weeks after IBM reported that its sales for its quarter ended September 30 came in at $18.8 billion, down two percent from year ago period, but flat when adjusted for currency fluctuations.
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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'". As we've reported in the past, we expected to see a significant increase in mergers and acquisition activity in the wake of President Trump's corporation tax repatriation holiday and indeed IBM was one of the beneficiaries of that plan given it had a sizeable overseas cash pile.
Rometty also pledged to continue to "build and enhance" Red Hat partnerships, including those with major cloud providers, such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud and Alibaba, in addition to the IBM Cloud. The question is how IBM's might and largesse in the digital world will influence the open source OS.
Yes, plenty of the VMs running under vSphere on the IBM cloud will use Red Hat, and lots of IT titans offer overlapping and/or competing products.
At the same time, sales last quarter overall missed analysts' expectations and the forecast for the current quarter also fell short, fueling concerns Red Hat may be losing deals to rivals and growth may be slowing. Jim Whitehurst also will join IBM's senior management team and report to Ginni Rometty. "Red Hat customers that want to remain on-premises are a large upsell market". It earned its distinction for being one of the first companies to make a living from open source software the way it was meant to be, by offering services in relation to operating and maintaining Linux systems, especially on the business side. "Since the day we made a decision to bring open source to the enterprise, our mission has remained unchanged".