IBM’s acquisition of RedHat was initially announced in October 2018 and sent shockwaves through the open-source community.

In May, the deal was approved by the US Department of Justice, which allowed IBM to close it earlier this month. The value of the deal was $34 million, or $190 per share. Considering that RedHat shares were valued at $117 on the market, IBM has paid a significant premium of 63 percent for the company.

This is only the latest in a series of open-source projects that have been acquired by large corporations this year. Microsoft paid $7.5 billion for Github, while SUSE Linux was bought by a private equity group for $2.5 billion.

The big players on the market are clearly more and more interested in Linux and many open source users are worried by this trend.

What will be the effect of these takeovers and will users still have access to their favorite software?  In this article, we will try to discuss the possible implications for users and the open-source community as a whole.

IBM’s plans

Officially, IBM aims to become a leading hybrid cloud provider, using RedHat’s valuable expertise in this field.

According to a press release from IBM, “IBM and Red Hat will accelerate innovation by offering a next-generation hybrid multicloud platform. Based on open source technologies, such as Linux and Kubernetes, the platform will allow businesses to securely deploy, run and manage data and applications on-premises and on private and multiple public clouds.”

Some IT business analysts consider the deal to be a desperate move from IBM, as the tech giant is struggling to stay relevant and gain a foothold in the Linux market. Others see it as a visionary step, which will have major consequences not just for the future of IBM but the community as a whole.

There is only one certainly: IBM will focus on the hybrid cloud technology developed by RedHat and try to integrate it in its business as soon as possible, in order to take advantage of the massive datacenter investments prepared by most big providers.

RedHat estimates that its products will power applications that will generate total revenues of $10 trillion this year, which is equivalent to 5% of the global economy. While this influence can’t be easily converted into direct earnings, there is no question that RedHat is a major player in the Linux industry.

According to IBM’s vision, the reason why only about 20 percent of companies have moved their business in the cloud is the lack of an integrated environment, which forces them to use multiple providers.

The new hybrid and multicloud environments would be much more flexible and greatly improve digital innovation, and IBM hopes that RedHat’s open source technologies can give it a major competitive advantage on the new market, especially by using Kubernetes as a container-based platform.

The future of open source

The major concern of Linux users when the acquisition was revealed was that some of RedHat’s open source projects would be abandoned or shift to a licensed model.

While RedHat Enterprise Linux (RHEL) is a commercial product, the company also supports CentOS, a free distribution of Linux that is fully compatible with RHEL and widely used in the hosting industry. The very popular Fedora Project is a free distribution that has a different goal: to test new software and technologies before they are integrated in RHEL.

In addition, RedHat contributes heavily to the development of several key open-source applications. These include Ansible, Ceph, Kubernetes but also Xorg or Java.

IBM has been quick to announce that the neutrality and independence of RedHat will be preserved and the company will remain committed to open-source. According to an official press release, this covers RedHat’s “open source community leadership, contributions and development model; product portfolio, services, and go-to-market strategy; robust developer and partner ecosystems, and unique culture.”

While the real value of such commitments remains unknown, RedHat’s operations have not changed so far. RHEL 8 has been released according to the initial schedule; the work on CentOS 8 has reached an advanced stage, and all major open-source projects continue to be developed, so there is no immediate cause of concern.

Other effects

Many analysts believe that IBM’s move will trigger a wave of major mergers and consolidations in the industry, involving both traditional players and startups from the cloud, devops and container sectors.

Most of the important Linux companies have already been bought by IT giants or are controlled by community projects, such as Debian. This leaves Canonical, the developer of Ubuntu, as the only available target for a future major takeover.

 

Overall, there is unlikely that the deal will have a noticeable impact on users, at least on the short term. While RedHat products will benefit from IBM’s massive marketing power and focus will shift to the cloud, the company will continue to develop open source software.

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