IBM closes world's second biggest IT deal to take on Microsoft, Amazon


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.

"[Businesses] need open, flexible technology to manage these hybrid multicloud environments. It changes everything about the cloud market", said Ginni Rometty, IBM CEO, Chairman and President. There's much talk Red Hat's independence being preserved but, of course, it will now be taking orders from IBM. The deal would position IBM as the leading hybrid cloud computing company and will help it to ramp up its cloud computing business.

Red Hat will continue to be led by Jim Whitehurst and its current management team.

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

With IBM's acquisition of Red Hat now formally completed, both companies are working to reassure customers and channel partners that the new arrangement will be good for technology-hungry enterprises and for the MSPs, VARs, resellers and others that help them build and manage their IT systems.

Red Hat will operate as a distinct unit within IBM and will retain its headquarters in Raleigh, North Carolina, as well as its brands.

Known for making mainframe computing, IBM has been struggling with issues of adopting cloud-related technologies for a long time. Red Hat's annual revenue for fiscal year 2019 reached $3.4bn, representing a year-on-year increase of 15% as well as the indomitable strength of both its offering and consumer demand.

"Over the next five years, IDC expects enterprises to invest heavily in their journeys to the cloud, and innovation on it. A large and increasing portion of this investment will be on open hybrid and multi-cloud environments that enable them to move apps, data and workloads across different environments", said Gens.

Going a step further Krishna explained that Red Hat's sales teams will not be folded into IBM sales teams.

IBM had received the European Union antitrust approval for its acquisition last month, as it looked forward to combating its declining sales of software and mainframes, by expanding its subscription-based software portfolio. "I very much want Microsoft and everyone very comfortable that they will get the same access as we get on that technology because that's critical for our customers that the same platform be able to run everywhere", she said. Krishna stressed that the Red Hat acquisition is not about achieving any cost synergies.

IBM and Red Hat also share a strong commitment to social responsibility and a sense of objective for applying technology and expertise to help address some of the world's most significant societal challenges.