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Impact of IBM-Red Hat Merger
Recently, there have been numerous machine learning, and AI algorithms developed to achieve the desired output in a dynamic, efficient, and effective manner. However, in a real-time scenario, an individual algorithm has its own advantages and is restricted to certain limitations. These limitations can be minimized by integrating different algorithms to achieve the desired task. By capturing the insights into the integral approach, IBM has announced its acquisition of Red Hat technologies to enhance its cloud-based business services to its clients.
In the past year, nearly a quarter of IBM overall revenue was achieved through the cloud service platform. But with an increase in competitors, the company was overshadowed by other cloud rivals such as Microsoft and Amazon. Ginni Rometty, CEO of IBM, stated that at present, only 20 percent of the companies are renting cloud services to cut costs; over 80 percent are still unlocking their business values and can shift their business applications to the hybrid cloud in the near future for data extraction and optimization.
On October 28, 2018, IBM officially announced its intention of acquiring Red Hat technologies for the cost close to $34 billion, which is approximately one-third of the IBM business value and 60 percent over the Red Hat value. This deal is found to be one of the shocking moments across the technology sector.
The Red Hat technology acquisition has led IBM to be one of the best hybrid cloud service providers, which enables numerous companies to move their business towards cloud services in a secure manner. Furthermore, with Red Hat’s open shift, open source contributions help in developing an enterprise-Linux based platform—Kubernetes. Hybrid cloud innovative solutions are also employed to provide an effective business solution to the consumers. In IBM’s big bet on Red Hat technologies, these innovative solutions have become the core part to enhance business strategy and may have a significant impact on open source community platforms.
This acquisition has also led to the deployment of IBM’s high-value model, where the revenue growth of the company will increase along with gross margin and free cash flow. Upon complete acquisition of Red Hat, it will join IBM’s Hybrid cloud team as a distinct unit, maintaining its own independence, current product portfolio, and go-to-market strategy. Although by joining as a distinct unit, there may arise some conflicts regarding user concerns with IBM owning the core element of a solution deployed in a competitor platform. Proper roadmap strategies will help both the customers and prospective users to enjoy hassle-free cloud services from IBM.