IBM closes $34 billion deal to ramp up cloud computing

    International Business Machines Corp. has closed on its $34 billion acquisition of software company Red Hat Inc., the company announced Tuesday, as it looks to ramp up its cloud computing business.

    Underscoring the drive into high-margin businesses, Reuters reports IBM agreed to buy Red Hat in October. The deal is IBM’s biggest acquisition in its more than 100-year history.

    Ginni Rometty, IBM chief executive since 2012, has steered the company toward faster-growing segments such as cloud, software and services and away from traditional hardware products, a course that has sometimes underwhelmed investors. IBM has faced years of revenue declines as it transitions from its legacy computer hardware business into new technology products and services.

    Red Hat, founded in 1993, specializes in Linux operating systems, the most popular type of open-source software and an alternative to proprietary software made by Microsoft. 

    The companies said IBM and Red Hat will offer “a next-generation hybrid multicloud platform” that will be “based on open source technologies, such as Linux and Kubernetes.”

    IBM’s cloud strategy has focused on helping companies stitch together multiple cloud platforms rather than compete head-on with “hyperscale” cloud providers such as Amazon Web Services, a unit of Amazon, Microsoft and Alphabet Inc’s Google.

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