Red Hat will exist as a separate business unit within IBM and will be neutral when it comes to which
companies’ cloud-computing services it steers clients, the companies said, addressing concerns that a
full-on integration could damage Red Hat’s reputation in the market and hurt customer relationships.
Red Hat built its success by enmeshing itself in the collaborative culture around Linux, the open-source
operating system, and perceptions of its impartiality could have been called into question if it were seen
to favor its owner’s products over the competition.
Such B.S. As of today, definitely not impartial anymore, despite the outward perception they insist they are projecting and will be abiding by.
[Entire article quoted]
https://www.wsj.com/articles/ibms-biggest-purchase-ever-has-high-stakes-for-rometty-11562676754
By: Asa Fitch
Updated July 9, 2019 4:26 pm ET
International Business Machines Corp. {IBM -0.88%} closed its roughly $34 billion acquisition of open-source software company Red Hat Inc., the company said, a deal for the 108-year-old tech giant that will help define Chief Executive Ginni Rometty’s legacy.
With Red Hat, the most expensive deal in IBM’s history, the company hopes to gain on competitors in cloud computing—where users store information remotely instead of on their own machines.
IBM was an early proponent of the cloud more than a decade ago but fell behind as Amazon.com Inc. and Microsoft Corp. gobbled up the majority of the now-booming market.
IBM’s counterpunch has been to court companies that want to use the cloud but keep their most sensitive data locked down on internal computers—a model dubbed the “hybrid cloud.”
Red Hat, which counts thousands of companies among its customers, fits into that strategy.
“I view this as a defining moment in IBM’s cloud journey,” Ms. Rometty said. “This puts us in position in hybrid cloud.”
Red Hat will exist as a separate business unit within IBM and will be neutral when it comes to which companies’ cloud-computing services it steers clients, the companies said, addressing concerns that a full-on integration could damage Red Hat’s reputation in the market and hurt customer relationships.
Red Hat built its success by enmeshing itself in the collaborative culture around Linux, the open-source operating system, and perceptions of its impartiality could have been called into question if it were seen to favor its owner’s products over the competition.
Red Hat, based in Raleigh, N.C., is the dominant player in the business of providing support for companies that use Linux.
Linux is free for anyone to use, but Red Hat makes money by offering its own version of the software, along with training and technical support.
The company had $3.4 billion of revenue in the year ended in February.
The deal was closed on the early side of IBM’s expectation of a close in the second half of this year.