IBM is acquiring Red Hat for $34 billion

IBM to acquire Red Hat for $34 billion.                  Gabriel Bouys  AFP  Getty Images

Red Hat started in 1993, with its headquarters previously on the North Carolina State University campus.

With this acquisition, Rometty said IBM will "remain committed" to Red Hat's open governance, open source contributions, participation in the open source community and development model, while also "fostering" its widespread developer ecosystem. 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.

IBM said Red Hat will join its Hybrid Cloud team as a distinct unit, "preserving the independence and neutrality of Red Hat's open source development heritage and commitment, current product portfolio and go-to-market strategy, and unique development culture". IBM, meanwhile, has watched its revenue decline in recent years. 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.

IBM hopes the acquisition will help it expand its position in the enterprise cloud computing market to better compete with the likes of Amazon, Google and Microsoft.

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In an interview with CNBC, however, IBM Chair and CEO Ginni Rometty said IBM didn't pay too steep a price. She has been trying to steer IBM toward more modern businesses, such as the cloud, artificial intelligence and security software with inconsistent results. 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 nearly forgotten.

Now you know the appeal of Red Hat.

Sending a strong signal towards dominating the emerging $1 trillion Hybrid Cloud market, tech major IBM has announced to acquire Open Source Solutions leader Red Hat for a massive $34 billion.

What just happened? IBM has announced it is buying open-source software developer Red Hat for $34 billion.

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In a blog post on Red Hat's site, executive vice president and president products and technologies Paul Cormier called the deal "a banner day for open source".

"Our unwavering commitment to open source innovation remains unchanged".

As far and fast as cloud computing is embedding itself into the enterprise, there remain many cloud-resistant applications and services. The question is how IBM's might and largesse in the digital world will influence the open source OS. It's well-known for trying to integrate acquisitions into its huge organization, a process known internally as "blue-washing". The two companies said the deal, approved by their respective boards, is subject to Red Hat shareholder and regulatory approval and should be completed in the latter half of 2019.

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