IBM and Red Hat, the world’s leading provider of open source cloud software, announced today that the companies have reached a definitive agreement under which IBM will acquire all of the issued and outstanding common shares of Red Hat for $190.00 per share in cash, representing a total enterprise value of approximately $34 billion.
[…]
With this acquisition, IBM will remain committed to Red Hat’s open governance, open source contributions, participation in the open source community and development model, and fostering its widespread developer ecosystem. In addition, IBM and Red Hat will remain committed to the continued freedom of open source, via such efforts as Patent Promise, GPL Cooperation Commitment, the Open Invention Network and the LOT Network.
This comes as a surprise, but now that I think about it, Red Hat would’ve been a great acquisition for a number of cloud providers, including Amazon and Microsoft. Let’s hope the second quoted paragraph isn’t an empty promise.
It always is.
Also, Sun employees could definitely tell things about IBM and patent promises…
Yup. Everything they say today will be a lie at some point in time.
It’s a corporation. They only abide by their promises till it becomes unprofitable/inconvenient.
I’m more concerned with so much of Linux and core open source infrastructure contribution now coming from a single corporation.
Luckily there are alternatives should those projects take hostile turns in the future. That’s the nature of open source. But when you have core projects that become dominated by a single player or insular cartel, that becomes much more difficult to get away from.
Unfortunately, people often decry such attempts (S6 or RunIt versus systemd, Mir versus Wayland).
I agree, options are good. Options are always good.
In all fairness, that was back when IBM’s financial interests were in making sure their mainframes didn’t lose market to Unix servers, IBM has changed since then.
But still, have one less “Linux consulting” company out there is worrying.
Edited 2018-10-29 10:44 UTC
Sun dug their own grave.
Redhat have been the standard bearer for making a profitable model based on open source foundations. With this move, expect the (few) remaining players to be poached quickly. SUSE was eaten up and its remains are still being passed around. With Redhat bought, I expect a feeding frenzy to focus Canonical as the big prize. My guess, Microsoft are already knocking at the door since all their recent partnerships…
SuSE, it might be a small miracle, not only survived being chewed, it also managed to crawl back out of the dead whale and became independent again (owned by some private equity).
In fact, they are doing better than ever. In August they claimed to employ 1,400 people. (In comparison, Red hat employs just over 10,000 people; Canonical employs about 500 to 600.)
Also among their claims:
– Market leader on Linux mainframes
– More than half of world’s top supercomputers run SuSe
– 70% of SAP installations run on SuSE, including 90% of SAP HANA
You see, if their claims hold merit, SuSE is now one of the famed “hidden champions” from Germany.
I was surprised myself!
Edited 2018-10-29 09:46 UTC
I wouldn’t boast about the market share of mainframes in 2018, or SAP. I wish them the best of luck, I loved SUSE at one point.
Sure it could be prettier. But they found their niche where they are player 1 and that pays them to expand. SAP is boring but it’s not going to go away soon.
They Had A Great Mail Server at Some Time.
Time to Finish the work and go kish the girl
IBM acquisitions never go well. All companies acquired by IBM go through a process of “Blue washing”, in which the heart and soul of the acquired company is ripped out, the body burnt, and the remaining ashes to be devoured and defecated by its army of clueless salesmen and consultants.
It’s a sad, and infuriating, repeated pattern. They no longer develop internal talent. They drive away the remaining people left over from the time when they still did develop things. They think they can just buy their way into a market or technology, somehow completely oblivious to the fact that their strategy of firing all their acquired employees/knowledge and hoping to sell software they have no interest in developing would somehow still retain customers.
They literally could have just reshuffled and/or hired more developers to work on the kernel, but the fact they didn’t shows they have no intention of actually contributing.
Did you also post this on slashdot, or just copy and paste from someone else?
Copy and pasting was involved.
Thank you for not forcing me to have to go through all the comments on slashdot to find it.
Google site search and/or ctrl+f are wonderful time-savers in such situations.
Ibm will gut this company, eliminate all American jobs and outsource everything to India. Quality of service will go down, calls and problems won’t be solved like they are now. It will be like the soft layer debacle.
Time to move to centos or Debian Linux before someone swallows them up
I remember all the fan-fare and Jobsian marketing speak when that deal was made. Every acquisition has been a debacle.
The irony of this statement is too much for me right now… you do know where CentOS is literally derived from, right?
Under IBM, will they continue to allow this kind of cloning? They now effectively control the base of the Linux used by Amazon and Oracle. Two very large rivals. CentOS is the community version of the same concept.
Too late. CentOS is owned by RedHat. Or should I say IBM now?
https://community.redhat.com/centos-faq/#_centos
Yes, and it can derive itself into a more stable direction.
what good would that do? The whole point of centOS is in being a clone of RHEL. Sure someone could fork it in case IBM stops distributing SRPMs or something but its main source of value would be gone
Luckily not my problem any more. I moved to FreeBSD some 6 years ago, and have never been happier. A much more organised and stable UNIX-like OS compared to the mess Linux is today.
Also, your CentOS statement is very funny. As the person ‘Number9’ pointed out. Isn’t CentOS derived from Red Hat?
(offtopic: from what is your avatar?)
In my view everyone should have already been on a Debian derived distro for services if you’re into Linux. However, I’d also argue that Canonical has a lot of pull at this point on that side.
Linux is big business and has been for years. Microsoft EMULATES it in windows at this point. If you don’t want a big corporate OS, you need to switch to another platform like a BSD, one of the solaris forks, etc.
When BSD is used on current game consoles and IIRC Netflix, it’s hardly niche, also big business.
None of the BSDs are owned by a big corporation. It’s certainly true that FreeBSD is used heavily in commercial circles these days and that their non profit foundation receives money from large companies. However, most of the BSDs are not in this situation. Not to mention the amount spent on development, services etc for *BSD is a drop in the bucket compared to Linux.
Take my project for instance. Including ads on the website, book sales and donations, we’ve received less than $1000 going back to the beginning of the project in 2006.
It’s impossible to measure, since the BSDs use the BSD licence and thus you can never be sure how much BSD derived code is out there.
Mac OS isn’t BSD, although it does contain a lot of BSD code. That’s like saying Haiku is BSD because they use freebsd network drivers.
XNU contains mach IPC, their own C++ driver API, some FreeBSD code and some custom stuff.
To get back to the original point, 75% of linux kernel development is paid for. https://www.computerweekly.com/blog/Open-Source-Insider/Linux-Founda…
Yes, because the licence makes it necessary for companies to disclose their contributions.
You can’t know how many companies out there use BSD because they’re not under the same licencing obligations. You literally do not have the figures, so you can’t say BSD doesn’t have as much as Linux. The only answer is “we can’t know.”
Oh right
(and iOS; what mostly brought Apple its billions)
Have a look at redhat.com
On the front side you seeing in big the redhat logo side by side with the IBM-logo and in big letters the text “IBM and Red Hat Combine to Create Leading Hybrid/Multi-Cloud Provider” which fills together with the two logos (nearly) the complete screen.
Have a look at ibm.com
On the frontpage is nowhere mentioned the word “redhat”.
I think that says a lot.
I think they were just slow.
The main content on IBM web site is the acquisition now. It reads:
“IBM to acquire Red Hat. This changes everything.
IBM will become the world’s #1 hybrid cloud provider, offering the only open cloud solution to unlock the full value of cloud for your business
See what this news means for you →
Start your journey to the cloud →”
They know they need to do something to stay alive. Their Watson efforts will do so much, and with even Microsoft embracing Linux as a first party offering there was little IBM could have done on their own.
“How are IBM technologies helping Rhinos?”
This better work out, otherwise it will be a disaster for the US tech industry.
Red Hat cloud products are great but Red Hat, as a company, lacked the power and influence that IBM can provide. They are pretty complementary.
As long as IBM respects Red Hat culture and keep them work with independence, this deal could be very positive. Amazon and Microsoft should be worried.
IBM is trying to change, trying to adapt to this new era and this is a great opportunity to show it. IBM has a lot to learn from Red Hat.
Spoiler alert: they won’t.
Considering the strong ‘our way is the only way for all of Linux’ mentality that I’ve seen out of RedHat, this may actually end up being a good thing for the Linux community as a whole…
After having witnessed countless IBM takeovers over the decades we should now know this will not be the case.
On top of that, I fail to see what it will do for them. They’ve bought a company that build a Linux distribution that they could have done themselves. To compete with AWS and alike it will need to actually build cloud infrastructure and get itself some solid technical direction.
It is hopelessly out of its depth in being able to do that. Making acquisitions does not magically make something happen.
segedunum,
Well, consider a counterexample: Google built it’s own video service, but despite google’s branding and empire of technical savvy, they couldn’t compete against youtube.
https://en.wikipedia.org/wiki/Google_Video
Sometimes it’s easier to buy a competitor outright and acquire it’s customers immediately than attempt to compete and grow organically. IBM clearly could have produced yet another distro. However realistically the difficulty isn’t in building a linux distro (I have done it for significantly less than $33B), the difficulty is actually in converting leads. Buying redhat outright instantly gets them the largest paying customer base in the market. I don’t know if it’ll ultimately be worth it, they paid a heck of a premium. But I think that attempting to compete against a dominant player would have left IBM struggling to catch up.
The same thing goes for AWS itself. Any software house could build it relatively easily, it’s just a bunch of relatively simple commodity services that aren’t particularly unique to amazon. IBM and others have competing offerings:
https://www.marketing91.com/aws-competitors/
That’s the conundrum for service providers who’d like to grow their market share. What makes AWS so valuable in particular isn’t the technology but rather the paying customers, it’s paying customers could be worth $100B.
Edited 2018-10-30 14:25 UTC
If they don’t have the expertise to create it, they don’t have the expertise to acquire and run one.
That has been borne out in every single acquisition they have made, from Lotus to SoftLayer to everything else. They simply have no idea what it is they are buying.
Put simply, IBM would never have been able to create Amazon Web Services internally.
Edited 2018-11-01 14:51 UTC
This could well be the off again for the “on again, off again, on-again” Fedora project sadly.
[End of Irony].
For 99% of users who use an OS as a means and not as an end, having to recompile VLC just to have the latest version of it (which isn’t in the repos of course, unless you use a bleeding edge distro) the phrase Year Of the Linux Desktop sounds like a threat
Remember, IBM was the source of the proprietary SCO UNIX code that was improperly contributed to the Linux project. Red Hat et. al sued them and SCO in the big SCO UNIX legal action in the 2000s.
Funny how things turn out.
Wasn’t it SCO who sued IBM?
I can remember the endless debates on Groklaw.net about ‘errno.h’
Oh, and SCO lost and lost and lost again but still the remants are hoping for a mega sized payday… sic
alt-reality here too?
Check your facts.
As a former Fedora contributor and actual Fedora desktop user, I can say I have a very bad feeling about that. And from what I see, my former colleagues I still follow on social media also aren’t optimistic.
My fist reaction was: that may be the push I long waited to switch to Debian. A short while to learn the differences and should be OK.
Thinking deeply, I am concerned by the future of Linux kernel itself: if you combine the existing IBM control over it with the existing Red Hat control over it, the result is too much control of a single entity, IBM, with no good history track on FOSS. Say anything about Red Hat, but they at least always had internally a solid Open Source culture.
I seriously tried to find a positive side, and the best one I could come was: at least IBM may fire all Gnome developers sooner or later.
I probably don’t know enough, but I wonder if “Free Software” had become a little dependent on Red Hat, and complacent about it.
Red Hat was probably as good a corporate steward as there is, but I’ve had the impression that Red Hat-led projects like Flatpak, etc., (even Gnome?) gave the impression of being the community’s default. (Maybe because there was the most money going into it?)
Corporate money in open source is probably always a bit nuanced, but maybe it’d be all right if Debian, GNU, FSF, etc. retake more of a leadership position from the Red Hat folks?
I agree with this.
But where will all those hands on the keyboards come from that the community risks losing?
Desktop Linux as of today is pretty much on par with Wnidows and OS X for most fundamental technologies but what happens when there is a new UEFI-like shift in on some underlying industry protocol and we have all (most) eggs in the relatively slowly incrementing Free software basket?
Red Hat always was a key bridge between industry and community. Such a transition would be painful without them.
“Free Software” became very dependent on paid developers… that’s a hard reality hard, and sometimes boring, software has to be developed who know what they are doing, as in work full time on it. If you want competent developers working full time on a project, you have to pay them… they are people, they have to eat, they have families…
So far Red Hat did a lot of good work paying people to work on some key areas of the FOSS ecosystem (sure, we also can argue about some people paid by RH being poisonous for the ecosystem, but that’s a minority). Also RH did a lot of good work providing what’s needed for a lot of volunteers to be encouraged to participate (conferences, sponsorship, travel, swag). Also, RH did a lot of things to legally defend FOSS from legal attacks from patent trolls or big rivals.
Debian, GNU, FSF, etc.don’t have the money to do such things. Money are at the big corps which don’t have FOSS in their DNA.
Remember the “Open Invention Networks”, lately joined by MS? As I said, that kind of venture is good for big companies, not good for FOSS. Now Red Hat (initiator of OIN) is owned by IBM, it makes even more sense.
An open source activist is no more, is Canonical the next on the list?
Open Invention Network is a Club. Nothing prevents, once cartels at bottle necks stablished, going rogue.
Open Software needs to prevent bottle necks.
While I (like most others) fear what IBM will do to Red Hat, in the long run it will make little difference. Red Hat has been a great contributor to Linux in general and there is little doubt IBM will start to curtail those contributions. They will do what they do and try to monetize everything that Red Hat does, cutting those efforts that do not contribute directly to profits. In doing so, they will kill what they currently covet. The great thing about FOSS is it does not live or die because of one company. Look at OpenOffice. When it was no longer viable LibreOffice came into being and filled the void. I would not be surprised to find some smaller distribution suddenly start swelling with ex-Red Hat employees and start filling the void left by this IBM deal. It won’t be that simple, easy, or quick, but if the demand is present somebody will fill the void. The IBM executives will look around one day and realize they may have purchased a company, but not a market.
They don’t care. They don’t even care for the products that originated at IBM. The MBA drones don’t understand where their numbers come from. They only see the numbers and think they have a life of their own.
That’s what you get when you believe in economic woo. It’s worse than quantum woo.
I’m not a professional programmer, but I’m shaking my head that IBM would pay (overpay, IMO)34 billion to acquire Red Hat.
It’s market capitalization prior to acquisition was about 20.5 billion US, meaning a premium of about 67.5 percent, if my math is correct.
Also, Red Hat reported revenues of 722 million in the most recent quarter. To put that in perspective, Microsoft’s Surface division put up 1.18 billion in the most recent quarter. Is the Surface division worth 34 billion plus???
This moves smacks of desperation on IBM’s part.
This is smelly indeed. The stock jumped 50%. A number of people made a shitload of money.
Yep. I’ve been long on RH since 2014. So, yes I’ve made a shed load of money.
I’ll wait to see the prospectus before finally deciding how to vote but I’m just a small (no, very small) stockholder so what I do won’t count.
On the bright side, at least it isn’t Microsoft doing the buying
You might consider going short on IBM now.
The return of IBM shaeningans from when they owned computer market would likely make you wish for Microsoft treatment…
Indeed. There will be a stock scam going on here so someone can make money.
From January 2014 to now IBM stock has gone from about $175 to $155.
The Dow Jones has gone from about 17000 to 24000.
Maybe I don’t have the right numbers but IBM looks like the walking dead here.
IBM is under great pressure to increase profits. They have had shrinking profitability for several years now. You can read about it on I, Cringely’s web site.
Watson is not making money. IBM’s own cloud business was not making money. There are two way’s to increase profit. Sell more stuff. Cut costs. They already cut costs.
Red Hat is in serious danger of getting gutted to improve short term profits that will temporarily stop the drop of IBM’s stock price. Don’t expect anything good out of this. IBM is in deep trouble and is acting out of desperation.
Lots of corporations have been cutting down their costs these days since business continues to change.
Since last year actually IBM made a pact with RedHat to only use their OpenShift container platform for distributing most of its products.
This was after a period in which they started selling their workstations with mostly RHEL certified equipment.
However nobody was expecting they would actually make this investment. It’s like saying “stop whatever you have been doing until now and let’s use this instead. Wether it will fly or not it remains to be seen.”
It would be really cool if they still sold dekstop/laptops. That would have made the next year the year of…
Financers will never learn the nature of Open Development.
Screw it, I am going back to VMS now that it works on X86_64.
http://vmssoftware.com/updates_port.html
A bit early for that but it is nice to see the progress being made.
I don’t get why IBM would pay this much to destroy the company…
For me, this is really about OpenShift and the modernizing/containerizing of various offerings. I really think IBM will demote most of their current offerings to legacy and run with what Red Hat has in its place, I just think the Red Hat portfolio is better and will benefit from the manpower IBM has in many ways.
IBM protected Linux in the SCO trials, it is the real reason Linux is popular today despite hobbyists insisting this is a community effort. Without corporate backing, we’d never have gotten this far.
IBM will provide the datacenters for OpenShift Online as well as the servers for private clouds and anything they don’t end up open sourcing will still run atop the platform. It isn’t perfect, they are unlikely to ever be a pure-play open source company, but together they can gain more traction than before.
I don’t think you pay this much for less than a fundamental shift in your company.
Edited 2018-10-30 06:23 UTC
Having respect for IBM within the Industry. Lot More than at more recent arrivals.
It’s my view that the move is for the good.
IBM has showed consistency at respecting openess.
Worries -and big ones- are about licences, corporativism through megalith-ization and -to this day- communities mishandling.