Why IBM has invested $ 34,000 million in the purchase of Red Hat – Marketing 4 Ecommerce

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Last October we learned the news that IBM would buy the open source software company Red Hat by the gigantic figure of 34,000 million dollars (around 30,000 million euros), which means its biggest purchase in history. Now, both companies have just announced the final closure of the agreement.

Let's try to analyze the factors that have made This move makes sense for IBM.

Reasons why IBM will buy Red Hat

Red Hat is a company that provides open source software, and that has achieved great growth due to its solutions in the cloud. So, Red Hat is all a power in the Open Source world, and this acquisition it will help IBM to face big competitors.

As he explained Ginni Rometty, President and CEO of IBM: "Companies are in the process of digital reinventions, modernizing infrastructure and moving mission-critical workloads through private clouds and multiple clouds from multiple providers. They need an open and flexible technology to manage these multi-cloud hybrid environments. And they need partners they can trust to manage and protect these systems. IBM and Red Hat are best suited to meet these needs. As a leading provider of hybrid cloud, we will help customers establish the technological foundations of their business in the coming decades »

1. IBM wants to take cloud computing seriously

One of the main reasons behind the purchase of Red Hat is the fight in a highly competitive market in the cloud. While IBM continues to face Amazon Web Services, Microsoft Azure and the Google cloud, it is not growing at the same pace as its competitors.

In short: if IBM does not act fast, will lose ground in the race of cloud computing. With the acquisition of Red Hat, IBM will be able to quickly position itself in one of the largest cloud providers in the world.

2. Watson has not had the expected success

IBM's artificial intelligence system, Watson, has not been as successful as the company expected, and in fact Deborah DiSanzo, the visible head of the Watson Health project (designed to apply artificial intelligence to the health sector) has had to withdraw from the project due to several errors at the time of perform diagnostics and prescribe treatments.

Unlike IBM, Amazon Web Services understood very early on that artificial intelligence is only worth it if companies and organizations can use it easily, and Cloud It is the key to making it more accessible.

Ana Gobernado (IBM Watson): "It's getting harder and harder to differentiate just because of the product"

3. IBM wants to compete with Microsoft in terms of open source

While Microsoft's attitude towards open source has slowly relaxed in recent years, IBM has not made any move. Coincidentally, Microsoft officially made GitHub recently, and it's clear that the future is open source, in fact it has been for some time.

4. IBM's large investment in Linux

IBM is investing in Red Hat as a fundamental component of your future product and software strategy, and on the other hand, Red Hat can take advantage of this investment, since despite being one of the most successful open source software companies, its shares have fallen by 14% since June … while they continue to fall as their revenues are not exactly large.

Since both companies have a great investment in Linux, this could be a very interesting relationship, with which this project can be supported in the future, besides that this multimillion acquisition could be one of the only ways in which open source can prosper in the future.

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