During the last year, we’ve seen a number of buzzworthy articles about the increasing adoption of open technology, in which the rise of open source is described as “meteoric,” “explosive,” and “skyrocketing.” From our perspective on the leading edge of this trend, we can’t argue.
In a bombshell move over the weekend, IBM announced that it would acquire Red Hat in a deal worth $34B. Big Blue announced that it would offer $190 per share of Red Hat in a cash transaction that represents a substantial premium over the latter’s current valuation. Red Hat stock closed at just $116.68 on Friday and was down slightly last week after missing analyst estimates, though the company increased subscription revenue by 20 percent.
This deal is the largest ever for an open source company and the third-largest tech deal ever.
However, the tech press might need to find some new adjectives: IBM has announced it will acquire Red Hat, a move that “changes everything about the cloud market,” according to IBM Chairman, President, and CEO Ginni Rometty. The deal closely follows the completion of Microsoft’s acquisition of GitHub, and news of the impending merger of Cloudera and Hortonworks; it also handily challenges the perception of IBM as a purely old-guard vendor dealing exclusively in closed-source, off-the-shelf software solutions. Furthermore, it underscores the legitimization of open source solutions for enterprise.
In 1993, Bob Young was unemployed and working out of his wife’s sewing closet on a new company he co-founded.
Here at Hardcastle, we can’t say we’re surprised – in fact, we see landmark deals like this one as an inevitable part of open source becoming mainstream for even the most mission-critical applications. We continue to experience firsthand how open source is increasingly important and can add value to customer in saving huge licensing cost, also resulting in and getting more value from geospatial data.