IBM to Acquire Red Hat in Deal Valued at $34 Billion

Megalith

Megalith

24-bit/48kHz
Staff member
Joined
Aug 20, 2006
Messages
13,000
IBM has announced it is acquiring Red Hat for $34 billion. The latter, a leading provider of enterprise open source solutions, was valued at approximately $20.5 billion. “IBM said the acquisition of Red Hat would position it to be a leader in the multi-cloud and hybrid cloud market.”

IBM reported lighter-than-expected revenue in its most recent earnings update. The company has been working to catch up to Amazon and Microsoft in the cloud infrastructure business. Cloud is one of IBM's four key strategic imperatives, or growth drivers -- the others are social, mobile and analytics -- and in the quarter, IBM announced cloud deals with Economical Insurance, ExxonMobil and Novis.
 
  • Like
Reactions: ChadD
like this
craigdt said:
They still have $34b to spend because companies like mine still use their legacy software.
Click to expand...

Exactly, either due to cost, or lack of replacement software, what's scary is new software platforms (Pega) are built to integrate with this 1984 green screen shit to give you the appearance of "Modern" UIs when really its still 1984 technology lol.
 
Sodapopjones said:
Exactly, either due to cost, or lack of replacement software, what's scary is new software platforms (Pega) are built to integrate with this 1984 green screen shit to give you the appearance of "Modern" UIs when really its still 1984 technology lol.
Click to expand...

I cut PC my programming eye teeth writing software to do a lot of really old SNA LU-0 and LU-2 comms with CICS and IATS backends for front (teller terminals) & back counter (investment & loans) banking systems in Canada. A lot of banks were hot to leverage their backends with nice up-to-date (and cheap!!) PCs showing Graphical user interfaces. The idea was to use the PC to present options/cross-sell to customers and run the transactions right there.

IBM spending that amount makes sense to me. IBM is just as heavy into supporting servers running RHEL as they are running AIX. This seems like a no-brainer for them since there are a LOT of their clients running it for their middle tier systems.

Yeah they have no problem dishing out $34B with all the corporate software and support contracts they have.They also have a lot of high-end server and host-tier equipment out there that requires both hardware and software maintenance. Some of it stupidly old and expensive to maintain. Yet for some of the biggest fortune 1000 enterprises out there those systems are 50 or more years old and horribly expensive to replace.

People just don't realize just how huge IBM still is. $34B is peanuts.
 
Last edited:
Sodapopjones said:
Exactly, either due to cost, or lack of replacement software, what's scary is new software platforms (Pega) are built to integrate with this 1984 green screen shit to give you the appearance of "Modern" UIs when really its still 1984 technology lol.
Click to expand...

If you look at it that way the entire world runs on 1967 software. (It does)

Windows machines still enumerate drives with stupid letters.... an idea Kildall cribbed from TOPS-10(launched in 1967) for CP/M in 73.

And yes Linux/Unix and every other modern OS has its roots in the same systems.

All modern computing stems from those same roots.

Still not sure what to make of this one.... IBM already has z/OS. Apparently only 30% or so of their mainframe clients are running Linux at all. I am sort of interested to see what IBM is planning for those markets. I would hope you don't spend 34 billion without a plan to grow.
 
cyberguyz said:
I cut PC my programming eye teeth writing software to do a lot of really old SNA LU-0 and LU-2 comms with CICS and IATS backends for front (teller terminals) & back counter (investment & loans) banking systems in Canada. A lot of banks were hot to leverage their backends with nice up-to-date (and cheap!!) PCs showing Graphical user interfaces. The idea was to use the PC to present options/cross-sell to customers and run the transactions right there.

IBM spending that amount makes sense to me. IBM is just as heavy into supporting servers running RHEL as they are running AIX. This seems like a no-brainer for them since there are a LOT of their clients running it for their middle tier systems.

Yeah they have no problem dishing out $34B with all the corporate software and support contracts they have.They also have a lot of high-end server and host-tier equipment out there that requires both hardware and software maintenance. Some of it stupidly old and expensive to maintain. Yet for some of the biggest fortune 1000 enterprises out there those systems are 50 or more years old and horribly expensive to replace.

People just don't realize just how huge IBM still is. $34B is peanuts.
Click to expand...

IBM is actually a $170B company so.... they just spent 20% of their value. That isn't a little purchase.
 
791892e6d6abc2bc56fe5230ff65093fb49a3c9c6580b20862b4966a75ed7829.jpg
 
longblock454 said:
As a RH Fan/Supporter/Engineer for 20+ years, this is bad news.
Click to expand...

I stand skeptical of this too- IBM seems to be profit-focused, meaning that they are producing value and their cloud stuff seems to be at least a minor hit, but Red Hat seemed to be doing pretty well on their own.
 
It says a lot about the modern IBM "that Cloud is one of IBM's four key strategic imperatives, or growth drivers -- the others are social, mobile and analytics". Rather sad for a company that used to set computing hardware and software standards for the world is reduced to trying to copy Amazon (cloud), Facebook (social), and Google (analytics). No clue who their mobile plan will try to copy. And that all four strategic imperatives already have major market owners.
 
Dead Parrot said:
It says a lot about the modern IBM "that Cloud is one of IBM's four key strategic imperatives, or growth drivers -- the others are social, mobile and analytics". Rather sad for a company that used to set computing hardware and software standards for the world is reduced to trying to copy Amazon (cloud), Facebook (social), and Google (analytics). No clue who their mobile plan will try to copy. And that all four strategic imperatives already have major market owners.
Click to expand...

Deeply Rested Parrot: expect they will copy Microsoft's lead in that tiny space. Or RIM. Or both. ;-)
 
ChadD said:
If you look at it that way the entire world runs on 1967 software. (It does)

Windows machines still enumerate drives with stupid letters.... an idea Kildall cribbed from TOPS-10(launched in 1967) for CP/M in 73.

And yes Linux/Unix and every other modern OS has its roots in the same systems.

All modern computing stems from those same roots.

Still not sure what to make of this one.... IBM already has z/OS. Apparently only 30% or so of their mainframe clients are running Linux at all. I am sort of interested to see what IBM is planning for those markets. I would hope you don't spend 34 billion without a plan to grow.
Click to expand...

My example is literally running the same 1984 program, with an UI overlay, that integrates with it........ Pretty sure Microsoft isn't plugged into the same 1967 servers....since they didn't even exist lol.
 
IBM has that money to spend because IBM, like all still-existing fossils, know how to sell services and teach their consultants the essential skills of a tick: dig in, suck blood. Nothing against consultants, they're just doing their job. But I've seen crazy $$ spent on Oracle consultants for systems that would have been way cheaper to get stitched together from open source by a skilled software engineer.
 
Sodapopjones said:
My example is literally running the same 1984 program, with an UI overlay, that integrates with it........ Pretty sure Microsoft isn't plugged into the same 1967 servers....since they didn't even exist lol.
Click to expand...

They are running basically the same software in much the same way. Very little software is written completely 100% from scratch anymore. Any C program that calls <stdio.h> is using code little changed since 1972. MS uses the same drive naming convention as Top10 developed in 67... which was stolen by one dude, then another dude, then our friend Bill.

I take your point though. Ya IBM have always been good at extending existing systems. I'm not sure that is a bad thing. The program worked in 1984... there is no need to reinvent the wheel. If someone wants it to look prettier so be it... the core software still adds some stuff to something else I'm sure.

Computational power goes up... but there isn't a faster way to define basic math, which is all 99% of business software is doing.
 
Back when I started they needed someone with in depth sco and Netware knowledge. All the nefinity servers supported Redhat at a much later date. Maybe IBM will work the same magic like they did with lotus and netobjects.
 
All new releases of RHEL will now ship with pre-installed Big Fix agents.
 
Why do you need to buy Red Hat? Is there something special about that Linux Distro that other free alternatives can’t already do?

Or is it the infrastructure and name?
 
next-Jin said:
Why do you need to buy Red Hat? Is there something special about that Linux Distro that other free alternatives can’t already do?

Or is it the infrastructure and name?
Click to expand...

Companies typically buy it for the stability and support. RedHat runs behind the latest so its a bit more stable (in theory) and security issues tend to get patched (not that they dont in the latest) in a timely manner. The majority of people that buy it though do so for the support. Not everyone has Linux Wizards working for them. Personally I dont buy it, I would rather use CentOS if going that route.
 
As a RHCE I can now charge double what I did before thanks to IBM now going to jack up the prices on everything, plus I speak fluent english which all the techs that IBM will turn out will speak some form of Hinglish and can't understand the customers needfuls.
 
  • Like
Reactions: mikeo
like this
Bigdady92 said:
As a RHCE I can now charge double what I did before thanks to IBM now going to jack up the prices on everything, plus I speak fluent english which all the techs that IBM will turn out will speak some form of Hinglish and can't understand the customers needfuls.
Click to expand...

"kindly do the needful"

you know the struggle too well friend.
 
Bigdady92 said:
As a RHCE I can now charge double what I did before thanks to IBM now going to jack up the prices on everything, plus I speak fluent english which all the techs that IBM will turn out will speak some form of Hinglish and can't understand the customers needfuls.
Click to expand...

I have been working with RH and Centos for nearly 20 years now...still havent found an employer willing to pay for the cert. None of them ever ask for it either oddly. Probably should consider getting it myself but it hasnt gotten in my way yet.
 
I am learning Linux again and was setting up my home server. I wanted Ubuntu Server, but NetPlan got the best of me. So CentOS it was.

It seems that I'll have to tackle the NetPlan monster after all...

edit: now people are speculating that Microsoft will eventually eat Canonical. Screw that noise.
 
Last edited:
purple_monster said:
"kindly do the needful"

you know the struggle too well friend.
Click to expand...

I have performed the upgradation of the needful on so many of the boxen over my career with our friends from the Far East that I've starting asking them for cooking recipes instead of scripts/documents as those usually work out better for me in the long run.


kju1 said:
I have been working with RH and Centos for nearly 20 years now...still havent found an employer willing to pay for the cert. None of them ever ask for it either oddly. Probably should consider getting it myself but it hasnt gotten in my way yet.
Click to expand...

I paid for it myself, deducted it from my taxes (LLC), and can put that on my resume or whatever company I work for consulting can say their SME's are RH certified.

Put it on a credit card and do it yourself. No one will pay you for it, ever. You'll make more in salary to cover that cost in the long run.
 
ChadD said:
IBM is actually a $170B company so.... they just spent 20% of their value. That isn't a little purchase.
Click to expand...

Purchasing a company is not like buying a car. The company being purchased has its own value to contribute to your overall income after the purchase.

IBM spent $34B to buy Red hat, but as of October 26, 2018 Red Hat is $20.8B company. The net cost to IBM is $14B - which is less than 10% of their value. As a purchase IBM, collects all of Red Hat's IP (Intellectual Property - patents, software, technologies and personnel which generates income. There's gonna be another big round of layoffs in IBM as get rid of their average performers and close departments to merge in all those people). So yeah, IBM is very far from bankrupting themselves.

I am dismayed to see them eating Redhat though. I have seen them destroy pretty much every company they buy. Remember Lotus? They were one of the top office software producers in the world... until they got eaten by IBM. Sad that...
 
cyberguyz said:
Purchasing a company is not like buying a car. The company being purchased has its own value to contribute to your overall income after the purchase.

IBM spent $34B to buy Red hat, but as of October 26, 2018 Red Hat is $20.8B company. The net cost to IBM is $14B - which is less than 10% of their value. As a purchase IBM, collects all of Red Hat's IP (Intellectual Property - patents, software, technologies and personnel which generates income. There's gonna be another big round of layoffs in IBM as get rid of their average performers and close departments to merge in all those people). So yeah, IBM is very far from bankrupting themselves.

I am dismayed to see them eating Redhat though. I have seen them destroy pretty much every company they buy. Remember Lotus? They were one of the top office software producers in the world... until they got eaten by IBM. Sad that...
Click to expand...

Good points... and I wasn't suggesting they couldn't handle the purchase. Just pointing out that it isn't a pocket change deal. Even 10% of their value isn't a small purchase. If a company spends 10% of their value every couple years and tanks the value of the purchase they won't last that long.

It will be interesting to see what IBM does with Red Hats patents.
https://www.redhat.com/en/about/patent-promise
Red Hat has been a big support of FOSS and only used their patents to protect FOSS. Hopefully IBM doesn't change that. It would be sad to see Red Hat go the way of Lotus. Hopefully this generation of IBM leadership ism't cut from the same cloth.
 
You must log in or register to reply here.
Back
Top