IBM Seals World's Second Biggest IT Deal with Red Hat, Pays $34 Billion to Take on Amazon and Microsoft
IBM and Red Hat. (Photo Credit: File Photo)

California, July 10: The 108-year-old International Business Machines Corp. on Tuesday sealed USD 34 billion purchase deal of Red Hat, marking the world’s second-largest technology deal ever. With this, IBM is looking to proceed in the path of competing with top software purveyors in the cloud.

Known for making mainframe computing, IBM has been struggling with issues of adopting cloud-related technologies for a long time. With this landmark deal, the tech giant is looking to catch-up with market leaders Inc. and Microsoft Corp. in offering computing and other software related services. CA Technologies, IBM Join Hands to Help Businesses Innovate Faster

Sharing more light on the hybrid cloud deal with Red Hat, IBM's Chief Executive Officer Ginni Rometty said, as reported by Bloomberg, "This is about hybrid cloud -- it is the future, it is the destination of the cloud. This market is a trillion dollars, it’s emerging and it’s very interesting to me that since our announcement now you hear everybody else talking about it too."

According to the details, the IBM is aiming at the so-called hybrid cloud, with which it can simultaneously run programs on both its own internal servers and the big public cloud providers including Amazon Web Services and Microsoft’s Azure.

Looking at the positioning of IBM in the software market, it had been trailing in generating revenue for six out of the past seven years and with the inclusion of new hybrid technology - in collaboration with Red Hat - IBM is mulling boost growth, opines Intelligence analyst Anurag Rana.

Applauding the new move of IBM, Rana stated, as quoted by Bloomberg, "What stood out to us was that IBM would be working closely to its main rivals, Amazon, Microsoft, Google and Alibaba. This shows a mature way of thinking about the competitive landscape, and if IBM remains true to this philosophy, it should show an improvement in growth down the road." Microsoft Sending Notification To Users About End of Support For Windows 7 - Report

Reports state to seal the deal, IBM paid USD 190 a share for Red Hat in cash, whose total equity value in the market is expected to be about USD 34 billion. Since the deal was announced in October last year, IBM shares gained about 12 percent. The multi-billion deal between two technological partners - Red Hat and IBM - clients would be offered the chance to merge their private and public clouds, despite the provider they use.