Last October we learned that IBM would buy the open source software company Red Hat for the gigantic number of $34 billion (around 30,000 million euros), which means its largest purchase in history. Now, both companies.
We are going to try to analyze the factors that have made this move makes sense for IBM.
Reasons why IBM will buy Red Hat
Red Hat is that provides open source software, and that it has achieved great growth due to its cloud solutions. Thus, Red Hat is all a power in the Open Source worldand this acquisition it will help IBM take on big competitors.
As explained Ginni Rometty, President and CEO of IBM: “Enterprises are in the midst of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors. They need open and flexible technology to manage these hybrid multi-cloud environments. And they need partners they can trust to manage and protect these systems. IBM and Red Hat are best suited to meet these needs. As a leading hybrid cloud provider, we will help customers lay the technology foundation for their business for decades to come.”
1. IBM wants to take cloud computing seriously
One of the main reasons behind buying Red Hat is fighting in a highly competitive cloud market. While IBM continues to face , and Google’s cloud, it’s not growing at the same rate as its competitors.
Bottom line: If IBM doesn’t act fast, will lose ground in the cloud computing race. With the acquisition of Red Hat, IBM will be able to quickly position itself as one of the world’s largest cloud providers.
2. Watson has not been as successful as expected
IBM’s artificial intelligence system, Watsonhas not been as successful as the company expected, and in fact, the visible head of the project (thought to apply artificial intelligence to the health sector) has had to withdraw from the project due to various errors when making diagnoses and prescribing treatments.
Unlike IBM, it understood very early on that artificial intelligence is only worthwhile if companies and organizations can easily use it, and Cloud is the key to making it more accessible.
3. IBM wants to compete with Microsoft in terms of open source
While Microsoft’s attitude toward open source has slowly relaxed in recent years, IBM hasn’t made a move. Coincidentally, and it is clear that the future is open sourceIn fact, it has been for some time.
4. IBM’s big investment in Linux
IBM is investing in Red Hat as a critical component of your future product and software strategyand on the other hand, Red Hat can leverage this investmentas despite being one of the most successful open source software companies, its shares have fallen 14% since June… while still falling as its revenues are not exactly great.
Since both companies have a big investment in linuxthis could be a very interesting relationship, with which this project can be supported in the future, in addition to the fact that this multimillion-dollar acquisition could be one of the only ways open source can thrive in the future.
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