IBM to buy Linux maker Red Hat to stay relevant in the cloud

JC Torres - Oct 28, 2018, 5:10pm CDT
IBM to buy Linux maker Red Hat to stay relevant in the cloud

IBM is the granddaddy in computing. Some might even call it the last surviving dinosaur. It has more or less survived lately on the server business but the rise of the cloud and cloud providers has seen its name overshadowed and almost forgotten. Now it’s adopting a strategy that may make it more enticing for those who want to move to the cloud without being locked in. The company has just announced a bid to acquire a fellow granddaddy, this time in the Linux space: Red Hat.

Though not exactly the oldest, Red Hat is indeed one of the pioneers in the Linux and open source world. 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. With the rise of proprietary cloud computing infrastructure and services, however, Red Hat itself might be feeling the pressure to find new sources of revenue.

In that sense, this business strategy could make sense for both companies, or at least for IBM mostly. IBM would compete in the cloud market by offering an alternative that won’t lock customers down to the provider’s tools and services. In other words, an open cloud provider improved by Red Hat’s decades of knowledge in Linux and open source.

For its part, Red Hat will not have to worry about going bankrupt in the near future. It will just have to worry about potentially being dissolved into IBM’s businesses or its open source culture and principles being diluted in the process. IBM promises that Red Hat will continue as an independent unit but under its own Hybrid Cloud team. At least that will be the state of things when the deal closes.

IBM revealed that it will be spending $34 billion for this acquisition, which should close in the second half of 2019 if it passes regulations. While it might be all good on the business side of things, such acquisitions do make open source advocates worry, especially users of the Fedora Linux distribution that’s based on and supported by Red Hat. Or CentOS which takes Red Hat and debrands it. While things are all status quo for now, big companies do have the tendency to pull the rug from under such projects which, compared to other open source software, often need more resources to serve a large user base.

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