IBM’s Red Hat Acquisition: Here’s What The Mega Deal Means

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IBM on October 28 made its biggest-ever acquisition- that of open source software company Red Hat for $34 billion, and the deal could have some impact on the India operations of the combined entity, feel experts. Calling the deal a “game changer”, IBM chief executive Ginny Rometty said in a joint statement with Red Hat that it will make IBM the world’s “#1 hybrid cloud provider”.

“The deal will have implications on technology and sales. It will give IBM more teeth against AWS (Amazon Web Services), Google, Microsoft and VMware,” said Sanchit Vir Gogia, founder and CEO of Greyhound Research.

He further said that AWS and Google do not have a strategy on hybrid cloud. AWS has tied up with VMware to address this.

“That space will be challenged significantly since customers will now have access to both open source virtualisation (offered by RedHat) and IBM enterprise support for critical workloads,” he added.

Hybrid cloud uses a mix of on-premises, private cloud and third-party, public cloud services with integration between the two platforms.

On the issue of employee impact, Gogia said the impact would be minimal.

“In terms of employees, there will be some overlap, and restructuring but a bloodbath is unlikely. Talent impact will be minimal from an overlap perspective since both companies have a very different DNA,” he said.

In addition, added Gogia, the deal will help Red Hat in the financial services space. “A lot of large financial services firms used to get cold feet (signing on Red Hat) since Red Hat is open source. Now with the size and scale of IBM, sales will be able to drive confidence among clients,” he said.



Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, an award-winning global research & advisory firm. To read more about him, click here.

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