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IBM to Acquire Red Hat, a Leading Java Community Contributor

IBM announced on Sunday plans to acquire leading enterprise open source software provider and longtime Java Community Process (JCP) leader Red Hat in a $34 billion stock deal.

Described by Big Blue as IBM's most significant acquisition and the most significant tech acquisition of 2018, the deal represents "a landmark moment for both companies and is a major step forward in IBM's ongoing focus on high-value business, the transformation of our portfolio, and our leadership in the emerging era of AI and cloud."

IBM and Red Hat said the deal, which has been approved by their respective boards, is subject to Red Hat shareholder and regulatory approval, and should be completed in the latter half of 2019.

Speaking this morning with press and analysts on a conference call, Paul Cormier, Red Hat's EVP and president of Products and Technologies, said the merger will help his company realize its vision for its Linux and open source offerings.

"Over the past 10 years or so, Linux has been the platform where most of the innovation in the enterprise has been happening," Cormier said. "We built a purposeful portfolio around Linux and open source tailored for the hybrid cloud ... But we're still a relatively small company. Our customers are seeing open hybrid cloud as the only way to bring public cloud into their IT infrastructure, and because of our size we can't recognized the potential of that demand. IBM helps us bring that strategy to 170 countries and accelerates our vision into the market."

IBM has long been a leading user and contributor to Linux, which undergirds Red Hat's top products, including the Red Hat Enterprise Linux (RHEL) OS.

On that same conference call, Arvind Krishna, IBM's SVP of Hybrid Cloud, said this acquisition will make his company the world's leading hybrid cloud provider. IBM's goal, he said, "is to win in hybrid cloud, and win on the basis of open technologies, and in the end to provide a technology that makes life easier [for companies] with less complexity and a future proof investment."

To a question about the potential impact of the acquisition on Red Hat-maintained open source projects, such as Fedora, Gnome, and CentOS, Cormier responded succinctly "None. No impact," he said. "The day after we close [the acquisition], I don't intend to do anything different. For us, it'll be business as usual. Whatever we were going to do for our roadmaps as a stand-alone will continue. We have to do what's right for the community upstream, our associates and our business."

Both executives claimed that the leading roles the two companies play in the JCP will not be affected by the merger. IBM and Red Hat are active members of the Java community, but Raleigh, N.C.-based Red Hat is one of the most active contributors, and has been for many years.

"Both IBM and Red Hat have been strong voices in that community," Cormier said, "and I think that will continue. Red Hat will continue to do what's right for the Red Hat portfolio, and I would guess that IBM would do the same."

Red Hat is, in fact, the largest contributor to the OpenJDK next to Oracle. Red Hat executives have served on the JCP Executive Committee and as Java spec leads or Expert Working Group members for more than 35 Java Specification Requests (JSRs). The first Context and Dependency Injection spec (JSR 299), which was led by JBoss Fellow Gavin King, had a big impact on Java EE 6. The company was also behind Enterprise JavaBeans (EJB) 3, JavaServer Faces, and the Java Persistence API. It collaborated on four JSRs for Java EE 7: Java API for RESTful Web Services 2.0 (JSR-339); Java Message Service 2.0 (JSR-343); Java Server Faces 2.2 (JSR-344); and Java Content Repository API (JSR-333).

Red Hat also spearheaded two OpenJDK projects: Shenandoah (JEP 189), which aims to provide an ultra-low-pause-time Garbage Collector; and Thermostat , an instrumentation tool for the Hotspot JVM.

Martijn Verburg, CEO of jClarity, co-organizer of the London JUG, and a member of the Java Community Process (JCP) Executive Committee, expects "a positive outcome" from the acquisition.

"IBM has actually shown Red Hat-like qualities when it comes to Java and Open Source," Verburg said in an e-mail. "They've recently OpenSourced their J9 VM (Eclipse OpenJ9) as well as their WebSphere Application Server (Open Liberty). They also are top tier supports of Microprofile, Jakarta EE and crucially Adopt OpenJDK.

Reza Rahman, SVP at AxonIQ, former Oracle Java developer evangelist, and co-founder of the Java EE Guardians, is "of two minds" on the acquisition.

"I totally understand the corporate rationale behind this for both IBM and Red Hat," he told ADTmag. "This is unequivocally good for the shareholders and employees of both companies. However, the reality is that the outcome for customers and the Java EE ecosystem may not necessarily be so rosy. It will likely mean less options for Java EE users and less market competitiveness. For example, it would not surprise me if Websphere Liberty, Open Liberty, JBoss EAP, WildFly, and Thorntail now need to merge. I hope smaller and newer market entrants will fill in any competitive gaps, as they should in a healthy economic space."

"I also wish both the Java EE folks at IBM and Red Hat all the best as long time colleagues," he added. "Hopefully they can manage to make this a good outcome for Java EE."

Another Java EE Guardian, Kito Mann, who is a principal consultant at Virtua Inc., sees a definite synergy among Linux, Java, and cloud services, but he worries about Big Blue.

"IBM's track record with acquisitions is questionable," he said in an e-mail. "Red Hat has done a tremendous job championing open source and building great products. Although IBM has plenty of involvement with open source, it's just not at the same level. My concern is that Red Hat will get absorbed into one or more huge IBM product lines and then fade into mediocrity or irrelevance (remember Rational?)"

About the Java connection, Mann has some questions: "In terms of Java, does this mean Red Hat products will start shipping with the IBM Java VM?" he asked. "What about JBoss and WebSphere (Liberty)? What about all of the great OSS products from Red Hat/JBoss, and the company's work culture?"

JNBridge CTO and co-founder Wayne Citrin, also has a few concerns about the merger. "My feeling is that there's getting to be too much concentration in the industry," he said in an e-mail, "and this doesn't help. Red Hat seemed to be doing just fine and didn't need to merge, but I can't blame them for cashing in."

About the Author

John has been covering the high-tech beat from Silicon Valley and the San Francisco Bay Area for nearly two decades. He serves as Editor-at-Large for Application Development Trends (www.ADTMag.com) and contributes regularly to Redmond Magazine, The Technology Horizons in Education Journal, and Campus Technology. He is the author of more than a dozen books, including The Everything Guide to Social Media; The Everything Computer Book; Blobitecture: Waveform Architecture and Digital Design; John Chambers and the Cisco Way; and Diablo: The Official Strategy Guide.

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