IBM Buys Red Hat Inc.

IBM closes acquisition of Red Hat Inc., a very high stakes deal for CEO Ginni Rometty.

IBM recently closed on its $34 billion acquisition of open-source software company Red Hat Inc., according to The Wall Street Journal. The deal is the most expensive in IBM history and will have a huge impact on the legacy of current IBM CEO Ginni Rometty’s legacy.

With the purchase, IBM hopes to gain an advantage over its competitors in cloud computing and storage. IBM was an early proponent of the cloud more than ten years ago, but fell behind as tech giants like Amazon and Microsoft overtook the booming market.

IBM is now focusing on companies that use the cloud, but keep their most sensitive data on locked in internal computers, called hybrid cloud. Red Hat offers training and tech support to companies that use Linux, a free open source system for hybrid clouds.

The purchase of Red Hat will allow IBM to better integrate itself into this narrow market of companies with hybrid clouds.

Red hat had $3.4 billion in revenue this last year.

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