Red Hat and IBM. What is connecting them?

Summary

Red Hat is not a separately standing company anymore. In the year 2019, it was acquired by IBM and became its subsidiary, while still keeping its neutrality and independence. In the article, we are summarizing the main facts related to the acquisition and what it has brought.

Red and Blue

Names like Red Hat or IBM are well-known almost to everyone.

Red Hat as the world’s open-source leader, famous mainly for revolutionizing the operating system with Linux, but currently offering also a broad portfolio of other products from middleware, storage, and virtualization to cloud solutions. And IBM (International Business Machines), frequently referred to as "Big Blue", as a technology giant starting its journey in the hardware business and becoming a top supplier of mainframe computers, in the later years focusing mainly on software and services.

But what do they have in common? Both companies were selling, and still sell information technology (“IT”) solutions to enterprise customers. In fact, IBM has also a long history related to the open-source movement’s success, helping to establish the Linux Foundation in the past and supporting the community by investing significant technical resources over the years.

One of the biggest software acquisitions in history

On the 9^th of October 2019, IBM and Red Hat announced, that they have closed a transaction under which IBM acquired all of the issued and outstanding common shares of Red Hat for $190.00 per share in cash, representing a total equity value of approximately $34 billion. It was one of the biggest software acquisitions in history, which shocked the software world.

Red Hat remained a distinct unit within IBM and was promised to keep its independence, neutrality, and unchanged commitment to the open-source model, which innovation will be supported together with broadening the range of Red Hat’s clients. On the other hand, Red Hat’s open hybrid cloud technologies were supposed to position IBM as the leading hybrid cloud provider and accelerate its business model.

A game changer in the cloud industry

To keep up with the pace of recent innovation and to stay competitive, companies are often looking for open source software and a distributed cloud environment. Over the next years, there are expectations for enterprises to invest heavily in their journeys to the cloud and innovation on it. IBM’s acquisition of Red Hat is therefore not only going with the flow but also providing an opportunity to help companies differentiate themselves in their industry by capitalizing on open-source in this emerging hybrid and multi-cloud world.

Joseph Jacks, the founder of Open Source Capital, said “IBM buying Red Hat is not about dominating the cloud. It is about becoming an Open-source software (OSS) company. The largest proprietary software and tech companies in the world are now furiously rushing toward the future. An open future. An open-source software-driven future. OSS eats everything.”

In October 2022, IBM announced that it will add Red Hat Storage to IBM Offerings (technologies from Red Hat OpenShift Data Foundation (ODF) as the foundation for IBM Spectrum Fusion). Besides, there are also plans to offer new Ceph solutions providing a unified and software-defined storage platform that bridges the architectural divide between the data center and cloud providers. According to IBM, the first merged solutions should arrive in the first half of the year 2023.

By integrating the products under one roof, IBM is accelerating its hybrid cloud storage strategy even more, while maintaining commitments to Red Hat customers and the open-source community, as was stated by IBM storage general manager Denis Kennelly.

The question here is, how blurred the lines between Red Hat’s open-source business and IBM will become in the future since the latest steps are making them thinner.