IBM to acquire Red Hat in deal valued at $34B

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The company has some 12,600 workers, 2,000 of which are based at its headquarters tower in Downtown Raleigh.

Over the last two decades, Red Hat has championed the open source movement.

But the company has struggled a bit lately. They're down from about $175 in June to under $117 on Friday.

As far and fast as cloud computing is embedding itself into the enterprise, there remain many cloud-resistant applications and services. Moreover, he said, "IBM immediately bolsters its position in today's multicloud world".

IBM was founded in 1911 and is known in the technology industry as Big Blue, a reference to its once ubiquitous blue computers.

IBM has seen revenue decline by nearly a quarter since Rometty, 61, took the CEO role in 2012.

Most reports are focusing on how Red Hat will contribute to IBM's hybrid cloud efforts, and thus give it a boost in competing with the likes of Amazon, but Red Hat's activities in the telco cloud specifically shouldn't be underplayed. She has been trying to steer IBM toward more modern businesses, such as the cloud, artificial intelligence and security software with inconsistent results.

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Under the hood will be a Qualcomm Snapdragon 845 SoC paired with 6GB / 8GB RAM options, and 128GB / 256GB storage options. For one, the new flagship will retain the same design language as its predecessor but will introduce some key changes.

"The acquisition of Red Hat is a game-changer", said Ginni Rometty, chairman and chief executive officer of International Business Machines Corp., in a statement Sunday. "This is a lot different than what IBM has done in the past with its cloud and services business".

IBM has unveiled plans to acquire open source specialists Red Hat, in a blockbuster US$34 billion deal created to bolster the tech giant's hybrid cloud capabilities. "This is the next chapter of the cloud". The question is how IBM's might and largesse in the digital world will influence the open source OS. The two are "committed" to open source, including contributions to the community.

IBM and Red Hat have maintained an alliance for some 20 years under which a number of Red Hat products, including Linux and Kubernetes, are part of IBM's $19 billion hybrid cloud software and services business.

"IBM has a chance to strengthen on premise assets and offerings", said Holger Mueller, principal analyst at Constellation Research Inc. Or CentOS which takes Red Hat and debrands it. But that is a shrinking business. "These are new products for IBM to sell".

The real question is whether Red Hat's influence on Linux and open source will grow now that it has IBM's financial backing. IBM promises that Red Hat will continue as an independent unit but under its own Hybrid Cloud team. Then again you don't pay a 60% premium for a company just to accrue its revenue and how IBM integrates Red Hat into the rest of its offerings will be what determines the success of this bold move. "It remains to be seen if IBM can play the same role, which would be significant upside for IBM".

The acquisition has been approved by the board of directors at both companies, but it must still be approved by Red Hat shareholders and is subject to regulatory approvals and other closing conditions.

Whitehurst also stressed that "Red Hat is still Red Hat".

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