IBM is acquiring open software company Red Hat for $34 billion in a deal that could disrupt things in the cloud computing market.
The deal, described by the company as the ‘most significant tech acquisition of 2018’ still needs approval from shareholders and regulators. The deal is expected to close in the second half of 2019.
‘The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,’ IBM chief Ginni Rometty said in a statement.
The cloud, simply, refers to software and services that run on the internet instead of your computer. Dropbox, Netflix, Flickr, Google Drive, Microsoft Office 365, Yahoo Mail are all cloud services.
These various platforms often offer data sharing within their personal boundaries and not amongst themselves.
Red Hat says its software solves that issue by allowing data to be more easily moved around.
Together, IBM and Red Hat say they will be ‘strongly positioned to address this issue.’
Think of it as democratizing cloud services for all.
IBM buying Red Hat means that it will start providing technology to its biggest competitors, including Amazon, Microsoft, and Google. Red Hat partners with all of them and IBM said it will continue the partnerships after the acquisition and work to expand on them.
CFO Jim Kavanaugh told investors during a conference call earlier this month that its cloud unit brought in $19 billion, up more than 20% from the same time last year.