Renowned IT conglomerate, IBM Corp. has recently announced plans to acquire Red Hat Inc., best known for its Red Hat Enterprise Linux operating system, for USD 34 billion, in a move aimed towards placing the tech giant firm into the ranks of the top cloud software companies in the world.
Sources close to the matter suggest that the cash deal, marked by far as IBM’s biggest acquisition ever, will effectively boost IBM’s credentials overnight in the fast-growing and lucrative cloud market, further giving it a much-needed potential for real revenue growth.
For the record, Red Hat is an open source software company that gives away the source code for its core products. The company’s Enterprise Linux operating system is currently being used as a core part of internet tech giants such as Google and Facebook and big corporations like Walmart and ExxonMobil as well.
Reportedly, IBM has long been a big user and contributor to Linux and other open source projects. However, in recent years, the tech firm has struggled to transform itself into a cloud computing company.
As per a recent survey, IBM was reported as the fourth most widely used cloud service, while Amazon, Microsoft, and Google led the market. In addition, the company was speculated to grow slower than the top three tech giants in the challenging cloud computing market.
According to Bloomberg, Ginni Rometty, Chairman and CEO of IBM Corp. was quoted saying that the acquisition of Red Hat would be an effective game-changer for their firm as it would deeply influence everything related to the current cloud computing market.
Reliable sources suggest that Red Hat would be a good fit for IBM’s current business. The company has reportedly transformed from a hardware behemoth to a services-centric company, and has long partnered with Red Hat for its software services.
Commenting on its recent acquisition, IBM said that Red Hat will operate as a standalone unit within the company’s Hybrid Cloud organization, while its leadership will remain intact in the market.