IBM Buys Red Hat Open-Source Company for $34 Billion

Ganesh The Awesome Senior Pre & Post-Sales Engineer at GlobalDots

29th October, 2018 1 Min read

IBM confirmed that it would be acquiring open source Linux firm Red Hat for $190 per share in cash, working out to a total value of approximately $34 billion.

Red Hat, known for its Red Hat Enterprise Linux (RHEL) operating system, is a leading software company that offers open-source software products to the enterprise community. Even Oracle uses Red Hat’s source code for its Oracle Linux product.

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Red Hat’s last year revenue was $2.4 billion, and this year the company has earned $2.9 billion. But if Red Hat products are open source and updates are free, you might be wondering how does the company earn.

Red Hat was one of the first companies who found a successful way to make money from free open-source software. It offers consulting services—including assessments, implementations, platform migrations, solution integration, and application development.

Like other big tech companies, IBM has also been a major supporter of Linux and contributor to the kernel and other open source projects, but the company has been left behind Amazon, Alphabet (Google) and Microsoft when it comes to cloud computing.

The accusation deal will help IBM expand its reach as an enterprise cloud computing provider.

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