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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 said Red Hat would continue to be led by Red Hat CEO Jim Whitehurst and Red Hat's current management team. Presumably the acquisition will have to jump various regulatory hurdles before it is set in stone.

IBM's emphasis of hybrid clouds as the reason for the deal shows the company thinks it will be better off tending to workloads that users put in clouds other than its own. "IBM will become the world's #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses".

IBM announced today that it will acquire open source firm Red Hat for approximately $34 billion in cash and debt. "The next 80% is about unlocking real business value and driving growth".

It's also a bet on the open-source software model, on which cloud computing typically operates. It intends to maintain Red Hat's headquarters, facilities, brands and practices.

The oldest company in technology believes that Red Hat can help its customers, many of which are still running the bulk of their their IT infrastructure in the old-fashioned way, address the modern era of multicloud and hybrid computing driven by Linux and containers.

"IBM has always been a proprietary software and services company, and this is an open-source play", said Venero, who praised Red Hat for its strong channel partnership in enterprise accounts.


While IBM's current position as a public cloud provider doesn't seem that impressive as compared to Amazon, Microsoft, and Google, the company plans to offer their combined technology to link their in-house cloud and other third-party cloud solutions.

"Today is a banner day for open source", said Paul Cormier, Red Hat's vice president and president of products and technologies.

The announcement comes as tech giants are betting that more companies and users will pay a subscription fee to store their data elsewhere, rather than buy expensive mainframes and hard drives - which had been IBM's bread and butter. "This is not about cost synergies at all", Rometty said in the interview. "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.

In 2016, Only Intel was ahead of Red Hat on the list of companies that contribute most to the Linux Kernel. "They understand and value how and why we are different and they are committed to allowing us to remain Red Hat while scaling and accelerating all that makes us great with their resources".

For all that, maintaining Red Hat's standing and culture could prove hard for the company once known as Big Blue.

Although the deal was approved by both companies' boards, it's not expected to close until well into next year. It took its name after a merger with another company, Red Hat Linux.


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