IBM’s nearly $34 billion acquisition of open-source cloud company Red Hat has closed, IBM announced July 9, creating a common platform for entities to manage their IT infrastructure.
"Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors," said Ginni Rometty, IBM chairman, president and CEO in a statement. "They need open, flexible technology to manage these hybrid multicloud environments.
Together, IBM and Red Hat will offer a next-generation hybrid multi-cloud platform. The platform will use open-source technology like Linux and Kubernetes to keep client data and secure both on-premise and on private and public clouds.
“We believe that hybrid cloud unlocks tremendous value and is the only way forward for our clients,” said Arvind Krishna, senior vice president of IBM Hybrid Cloud.
Both companies have emphasized since the deal was announced that Red Hat’s business wouldn’t change, even given that some of Red Hat’s clients are IBM competitors. And Krishna said that Red Hat’s business under IBM ownership will be uninterrupted and will remain independent from IBM.
“They make their own decisions on pricing, who they work with, many of whom will be competitors to IBM,” Krishna said. “This is a world of ‘cooper-tition,’ I believe; this is no longer a world of pure competition.”
Red Hat has branded itself as the “Switzerland” of open-source cloud software providers.
“That independence is essential to assure our other partners, in some cases competitors to IBM, that they will have an equal shot at the business out there,” said Paul Cormier, president of products and technologies at Red Hat.
Red Hat partners include cloud service providers such as Amazon Web Services, Microsoft Azure and Google Cloud, all of which have public sector footprints.
“Fundamentally, this acquisition’s close is important because it resets the cloud landscape. For clients looking to extend or begin their cloud journey, hybrid is the answer," IBM said in a statement.
Krishna said that IBM and Red Hat share a “common vision” on the importance of hybrid technology to reduce costs and increase productivity as companies move critical workloads to the cloud and they wanted to create a common platform that “unlocks value for our clients and lets them move forward,” Krishna said.
“It is the way to accelerate innovation going forward and … we are going to bring those capabilities in a much broader way,” Krishna said.
Linux, Red Hat’s enterprise software, is expected to contribute more than $10 trillion to global business revenues by 2019, according to the release. The release also said that 640,000 people will work in new Red Hat-related jobs by 2023.