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IBM has announced a colossal agreement to acquire Red Hat for $ 34 billion. According to analysts, this is good news for IBM in the cloud market, but some software developers are panicked.
At a value of $ 190 per share, Red Hat would constitute the third largest acquisition of American technology, and the largest transaction of IBM in 107 years of existence.
It's also a huge bet on open source, where developers around the world are putting their time and expertise to the service of designing software projects, big and small, that everyone, no matter what. where, can use for free at will. Red Hat was one of the first companies to turn open source into a viable business model and remain a fixture in space.
The rise of open source seems to be a recurring theme in technology this year. Just last week, Microsoft officially acquired GitHub, a platform for open source coding projects, worth $ 7.5 billion. Earlier this month, Cloudera and Hortonworks merged for $ 5.2 billion. And earlier this year, Salesforce also acquired MuleSoft for $ 6.5 billion.
Nevertheless, the deal has sounded the alarm in Silicon Valley and beyond, with some fearing that IBM is not the ideal long-term focus for Red Hat – and that the world of the Open source.
What does Red Hat do?
Red Hat manufactures open source software for businesses. It is one of the largest Linux vendors, an open source operating system often used to power enterprise data centers. Linux is an operating system, similar to Windows and MacOS, that has been around since the 90s, but Red Hat specifically develops a customized version of Linux for businesses.
It is best known for Red Hat Enterprise Linux (RHEL), a specialized version of the operating system. Because RHEL's download is free, Red Hat charges for the software enhancements and technical support companies need, such as maintenance, support, and installation.
Soon, other startups started following Red Hat's business strategy. Even today, promising startups such as Docker and Mesosphere have followed suit to look for ways to use open source software to generate revenue.
What does IBM plan to do with Red Hat?
IBM plans to use Red Hat software to connect these Linux-based enterprise datacenters to leading cloud computing platforms, according to a model called "hybrid cloud." Customers running Red Hat software on their servers would have an easy way to move some or all of their applications to the cloud at their own pace, IBM said.
In addition to its own IBM cloud, IBM also plans to maintain and strengthen Red Hat's existing partnerships with other leading cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba. To this end, IBM will lead Red Hat as an independent subsidiary to maintain its neutrality with respect to cloud platforms.
In addition, IBM has stated that it will not prevent Red Hat from contributing to open source projects, nor from managing popular projects already managed, such as the CentOS operating system or the system. Ansible computer automation tool.
Analysts expect this change to have broad ramifications for the cloud landscape and give IBM a competitive edge to keep pace with key players in the cloud computing market, such as Amazon, Microsoft and Google. In other words, this acquisition retains the relevance of IBM, even though its own cloud lags behind those of Amazon and Microsoft.
Nevertheless, not everyone is convinced that this agreement will be a good thing.
Why are people crazy?
Despite IBM's assurances that Red Hat would maintain its independence and continue to contribute to open source, many nervous Linux developers (and at least one claiming to be a Red Hat employee) see this example another example of a technology giant engulfing a beloved. open source software company.
"I am absolutely shocked by this news," said a Reddit user who claims to work for Red Hat. "Nothing indicates that Red Hat is about to be acquired.The benefits were good.The open source community was great.Not to mention IBM, IBM is almost anti-theft. Red Hat regarding their values. "
More directly, fans of Red Hat's open source software feel that IBM's much larger corporate culture will have a negative impact on its products.
These fans are worried that IBM is only asking for drastic changes to Red Hat or is disassembling and basically absorbing them. These concerns echo the fury that followed the announcement by Microsoft of the acquisition of GitHub, the open source community hub, for $ 7.5 billion. This deal closed last week.
"IBM has a long track record in acquiring big businesses and destroying their culture," said a Reddit user. "Think of it as corporate colonialism, and sometimes it leads to an exodus of talent that has serious implications for product updates and support."
In addition, the technology sector saw IBM as a company that had fallen behind as one of the oldest technology companies and in recent years, IBM has struggled to get into the cloud war with Amazon and Microsoft. Founded in 1911, IBM has lost the essence of its reputation as an innovator.
"IBM's reputation with open source is fine, it's the rest of their reputation that worries me," wrote another Reddit user.
Reasons to be optimistic
Indeed, IBM and open source are very old, which, according to experts, could give Red Hat fans reasons to be optimistic.
"Many people say that this will be a problem for Red Hat and that open source code will be laundered for IBM," said Chris Gardner, Senior Analyst at Forrester, Business Insider. "These are all things that I think are a very bad analysis, and IBM has made a lot of effort to develop open source over the last ten years or so."
Indeed, IBM has already supported open source projects as an early Linux supporter and, like Red Hat, is one of the top 10 contributors to Linux. He has already invested billions of dollars in Linux and is a member of the Linux Foundation. He even created a technology center specifically designed for Linux.
At the same time, the Linux Foundation, which oversees the development of the operating system, has welcomed this change, which reflects the importance of open source.
"IBM's announcement of the Red Hat acquisition represents a tremendous opportunity for both organizations and underscores the importance of open source in the technology sector." IBM is a defender major open source for more than two decades: promote and defend Linux and open source at critical moments stresses in its history, "wrote Jim Zemlin, director of the Linux Foundation, in a statement on the # 39; s acquisition.
And just when former Microsoft CEO Steve Ballmer declared war on the open source concept, IBM boldly announced its Linux support, which she embraces wholeheartedly . More recently, Microsoft has completely transformed its attitude towards open source, but IBM has been supporting it for longer.
"[IBM pledging support for Linux] It was an important step towards legitimizing this movement, "said Bill Karpovich, Business Insider, senior vice president of the open source software company Sonatype and former executive of IBM Cloud.[IBM has] always had a business model that supports open source … They place their money where their mouth is. With this acquisition, they certainly invest a lot in the open source model. "
Gardner agrees, however, that developers' concerns about the deal may have some merit. The two companies have very different cultures: IBM is a century-old technology giant with a bureaucratic culture and the largest major customer, while relatively young Red Hat, founded in 1993, serves a generally smaller customer base and is more focused on taking risks.
"There is potential for problems here," said Gardner. "These are not dramatic problems that change life, but there is a significant difference in culture and how they manage business customers."
For this acquisition to work, he says, IBM should give Red Hat only a slight impact.
"This should allow Red Hat to do its job," said Gardner. "As long as IBM has that light touch, everything is fine, they are trying to change the culture a bit, and it will not work."
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