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IBM’s $34 billion purchase of Red Hat is a mega-bet on a coding revolution

October 29, 2018

The world’s biggest-ever deal for a software company points toward a significant change in how code is being developed for the computing cloud.

The news: Big Blue is swallowing Red Hat, a company that has made its reputation in open-source software development. The open-source movement makes core code freely available so that a community of developers can keep updating it. Companies like Red Hat create services to help businesses deploy and use that code.

Not just a business deal: IBM is interested in Red Hat because of its infrastructure for managing various kinds of cloud platforms. But its move is also a big bet on what’s known as containerization, a new way to create applications for use in the cloud. This involves bundling together an application with all of its related libraries, configuration files, and other things needed for it to run efficiently. A huge headache with traditional software development is that code developed in one computing environment can prove glitchy when deployed in another. These packages, or containers, can be used to create applications that run smoothly on any cloud service.

Container shipping: Containerization’s fans claim that companies using it will be able to create and deploy applications faster than rivals. But managing containers is still a costly headache. That’s one reason why venture capitalists have been pouring billions of dollars into container startups. Red Hat already has a popular service called OpenShift, which is an open-source platform for managing containers in popular ecosystems like Docker and Kubernetes. So buying the company gives IBM an automatic edge in the emerging field.

There’s no guarantee that containerization will become the de facto way to develop cloud-native applications. But if it does catch on more broadly, it could help justify Big Blue’s record-breaking deal.

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