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Article from Issue 218/2019

IBM acquires Red Hat, Fedora 29 and Ubuntu 18.10 released, Redis Labs modules forked, Microsoft offers its patent portfolio.

IBM Acquires Red Hat

In a surprise move, IBM has announced that it is acquiring Red Hat for $34 billion. A primary reason for the purchase is to support IBM's hybrid cloud and Kubernetes business. IBM is a distant fourth player in the public cloud space, behind AWS, Azure, and Google Compute Engine.

Red Hat's primary bread winner is still Linux, but the Linux business has kind of reached a saturation point. The real year-on-year growth is coming from the emerging business, which is the cloud.

Red Hat doesn't have any public cloud offerings; its strength is Kubernetes-based OpenShift, which enables customers to embark on their hybrid cloud journey. However, Red Hat can grow only so much as customers move to public cloud configurations. Red Hat can't scale to address the growing market, and it is limited in how much it can invest in other hot emerging technologies like Machine Learning and IoT. "We can only do so much," Red Hat President and CEO Jim Whitehurst told me in a previous interview.

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