How IBM’s Recent Acquisition Will Greatly Affect B2B Buyers

The decision made by IBM recently to acquire Red Hat, an open source software provider, for over $34 billion can potentially create a competitor to Amazon Web Services and Microsoft in the cloud computing environment while also triggering several other M&A’s among B2B technology-driven vendors according to experts.

New York based IBM, Armonk, informed analysists that Red Hat will eventually become a distinct unit forming part of its team which focuses on hybrid clouds, using several private cloud services which the company runs on its own proprietary servers as well as those of a third-party provider of IT infrastructure and software. The recent deal took place a few months after GitHub was acquired by Microsoft, an extremely popular online company of open source code which was bought for around $7 billion.

Most organisations that are interested in running IT services and products via cloud are inclined by looking at AWS’s Elastic Computing services or Microsoft’s Azure. The executives at IBM suggested acquiring Red Hat as they own the most popular distribution when it comes to the Linux operating system which would make it the ultimate cloud provider. However, early reaction from experts in the tech industry, suggests that Big Blue is also looking for new ways to expand beyond its Watson AI technology.

Arguably it is the best backgrounder when it comes to IBM’s strategy, as well as the potential from the deal made with Red Hat, is available in Ben Thomson’s long post, an independent analyst who frequently publishes on Stratchery, the name of his own blog.

“The bet is: while the complexity of the internet during the 1990’s made it extremely difficult for organizations to go online, offering an opening for IBM to successfully sell solutions, these days IBM claims the reduction when it comes to cloud computing to 3 centralized providers, making businesses reluctant to pledge to any one of them,”

Ben Thomson wrote in his blog, expressing his doubt that a company like IBM will ever be successful in terms of hybrid cloud space. “With an enterprise concerned when it comes to lock-in, is IBM truly a better option? Should the answer be that Red Hat is indeed open when increasingly sophisticated organisations built it themselves?”

The Start of Martech M&A Chaos

Although CIO’s, as well as other IT decision makers, could explore their options once the Red Hat-IBM merger is completed, analysts in the financial industry suggest that the deal might be a catalyst for several other acquisitions. These include vendors like MongoDB, Okta, Workday, and many more.

Raymond James, a CNBC analyst at the firm stated, “Leading software companies like Tableau, Splunk, Workday, and ServiceNow, along with Nutanix, a converged infrastructure company, could eventually be taken as well.” Meanwhile, J.P Morgan experts managed to list over 15 different targets that could potentially be acquired in the wake of Red Hat. The cloud wars has just started, and there is certainly more acquisition deals in the pipeline.