The IBM Red Hat acquisition nets its first big payoff with AT&T strategic alliance, multi-year, multi-billion dollar contract. IBM’s move, acquiring Red Hat in order to be the hybrid multi-cloud platform out there, was smart. Hybrid multi-cloud is not only the reality of the enterprise today, it’s the reality of all businesses. The ability to modernize apps, move them to the cloud, partner seamlessly with others, and manage everything in a hybrid cloud environment isn’t rocket science, it’s table stakes. I’m looking forward to seeing what’s on the horizon for these two.
Strong performance by Red Hat is good news for IBM shareholders, making IBM a more competitive player in the Hybrid IT space and significantly increasing the company’s ability to deliver open source software to enterprise in both hybrid and multi-cloud environments. I expect the acquisition to improve IBM’s status. While the price was steep, the company’s ability to grab both market share and the Red Hat community will likely both accelerate revenue and brand equity. All in all, I believe this was smart buy that I think will prove out over the next four quarters following the close of the acquisition.