Cloud Leaders Shrug at IBM’s $34B Red Hat Deal
Summary
Scooping up Raleigh, NC-based Red Hat (NYSE: RHT ) could make IBM (NYSE: IBM ) more competitive with bigger cloud players such as Amazon, Microsoft, and Google, says Michael Skok, a partner with Underscore VC , a Boston venture firm that invests in startups in cloud infrastructure and open-source software, among other sectors.Skok says the deal, which hasn’t closed yet, also makes sense for Armonk, NY-based IBM given the current state of the cloud computing market, which is primarily focused on serving businesses in a “hybrid cloud” environment.A lot of them are using a hybrid approach that involves some combination of apps and IT systems running on the company’s own on-site hardware; on remotely located servers that are owned by a third-party vendor but managed privately by the company; and “public” cloud systems running on remote servers, in which the company shares a pool of virtualized computing resources with the cloud vendor’s other clients.But he believes businesses should—and eventually will—abandon their on-premises hardware and switch to IT operations running entirely on remote servers owned by cloud vendors.Donning Red Hat, which generated $2.9 billion in revenue and a $258.8 million profit last year, should give IBM’s business a lift.
