The Center for Media Justice launched an online petition past year to stop IBM from developing cloud resources that would use facial recognition technology to identify undocumented immigrants so that they can be detained, denied visas and deported from the United States.
The Red Hat deal represents an admission by Rometty that in-house growth wasn't going to be enough to keep IBM from falling permanently behind in a market that is growing in importance and size.
This announcement is the largest software company acquisition to date.
IBM will pay US$190 a share in cash for Raleigh, North Carolina-based Red Hat, according to a statement from the companies Sunday, confirming an earlier Bloomberg News report. IBM, meanwhile, has watched its revenue decline in recent years. The hope is to address the proprietary issues plaguing today's cloud market that have so far hindered the portability of data across multiple clouds as well as effective multi-cloud security and management.
IBM said it will make the purchase with cash, credit and bridge lines, but did note that it would be disciplined to preserve its credit rating. Between them, IBM and Red Hat have contributed more to the open source community than any other organisation. However, companies that are deploying workloads on public cloud providers tend to prefer Ubuntu Linux for that work, and that coupled with acceleration toward the cloud in general has stalled revenue growth in that category. "Red Hat customers that want to remain on-premises are a large upsell market". In other words, an open cloud provider improved by Red Hat's decades of knowledge in Linux and open source. While some of that has been from divestitures, most is from declining sales in existing hardware, software and services offerings, as the 107-year-old company has struggled to compete with younger technology companies. I'm sure I am not alone is fearing that IBM could ultimately ruin Red Hat and its offerings. It also expects to use Red Hat's open source roots to its advantage - in theory, this encourages companies to move to the cloud when they'd otherwise be wary of being locked in. The question is how IBM's might and largesse in the digital world will influence the open source OS. Red Hat will continue to be led by Jim Whitehurst and Red Hat's current management team.
Whitehurst also stressed that "Red Hat is still Red Hat". "It remains to be seen if IBM can play the same role, which would be significant upside for IBM". Imagine Red Hat reaching all corners of the world, with even deeper customer and partner relationships than we have today.
The deal, which is subject to Red Hat shareholder approval, is expected to close in late 2019. Among the possibilities are Google and Cisco Systems Inc., both aiming to boost their different cloud strategies.