IBM and Red Hat seal the deal

Red Hat and IBM

In its press release, IBM said the acquisition marks a seismic shift in the cloud market, with Red Hat's open hybrid cloud tech merging powers with IBM's unrivalled scale of innovation and industry expertise. Red Hat CEO Jim Whitehurst and the wider leadership team "are all staying with us for a good long time", Rometty said.

With the deal now done, questions about how IBM will handle Red Hat's enterprise application software portfolio and direction moving forward can now be officially answered. "As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come".

"We think open source has become the de facto standard in technology because it enables these solutions".

Red Hat will still be lead by its CEO James Whitehurst and its management team, but Whitehurst will report to IBM's Rometty directly.

IBM's acquisition of Red Hat, announced with a splash last October, is created to increase the stakes and opportunities of both companies in the cloud marketplace - especially in hybrid cloud. Travelling along a similar path is the globally renowned International Business Machines Corp., which has been striving to adopt cloud-related technologies. IBM also stated that it will remain committed towards Red Hat's open governance, open source contributions and participation in the open source community. Over the next five years, IDC expects enterprises to invest heavily in the cloud.


"A large and increasing portion of this investment will be on open hybrid and multicloud environments that enable them to move apps, data and workloads across different environments", said Frank Gens, Senior Vice President and Chief Analyst at IDC.

In acquiring Red Hat, IBM will "turbo charge" the former's growth. In that model, there could be situation where IBM and its Red Hat subsidiary could be competing with other, though Krishna referred to the situation as being - coopetition. Additionally he emphasized that Red Hat sales people would not be compensated or incentivized to sell IBM products either. "We have all the critical parts", she said. Some analysts doubt even Red Hat will save it.

"We're not talking about layoffs", Krishna said. Red Hat Enterprise Linux alone is expected to contribute to more than $10 trillion worth of global business revenues in 2019. Rometty said no job or cost cuts are planned at Red Hat.

Having already fallen behind in public cloud, IBM is now betting big on the so-called hybrid cloud, which allows companies to simultaneously run programs on their own internal servers and the big public cloud providers like Amazon Web Services and Microsoft's Azure.

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