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IBM and Red Hat – What’s It all About?

Posted on November 13, 2018 by Bill Langston

Most people who work on IBM i don’t have much exposure to the LINUX operating system or familiarity with how the LINUX software marketplace is organized. Given that, you might not know what to make of IBM’s plan to pay $34 billion for the software company known as Red Hat.

Who's Red Hat?

Red Hat is a $3 billion dollar software company focused on LINUX software development, support, and consulting services.

What's LINUX?

LINUX is a computer operating system, but unlike IBM i or Windows, LINUX is an “open source” operating system, meaning it is not owned and controlled by a single company. You don’t pay a license fee for LINUX, and today you can run LINUX on IBM Power, IBM z, and many other computers.

Who Develops LINUX?

When it was introduced in the early 1990s, the creators of LINUX envisioned programmers working independently, writing and sharing source code that would lead to the development of a competitive, “free,” operating system kernel that could replace expensive, proprietary operating systems from IBM, Microsoft, and others. It’s doubtful they imagined that a substantial for-profit ecosystem would grow up to support the software.

At least in theory, anyone can contribute code to the LINUX kernel, for others to use at no cost. In practice, nearly all contributions that become part of the LINUX kernel originate with software developers employed by a handful of major companies including Intel, Red Hat, Samsung, and IBM. These companies do not own LINUX, but they do work closely with the non-profit LINUX Foundation which controls the strategic direction of the project.

How Does Red Hat Make Money?

The founders of Red Hat saw that companies were paying Microsoft and IBM a lot for operating system software and that these companies would love a competitive and lower cost alternative. They guessed correctly that companies with an interest in using LINUX would be much more inclined to do so if they could go to one provider, pay an annual support fee, and download a stable “distribution” of the software. Red Hat put together the team to provide that service and became a huge enterprise.

Why Would IBM Want Red Hat?

While IBM continues to develop and earn billions of dollars a year from proprietary operating systems like IBM i and z/OS, LINUX use is growing at a much faster rate – especially in the large data center, cloud and mobile computing markets. By acquiring Red Hat, IBM hopes to grab a much larger share of that growth.

LINUX and open source thinking has had a tremendous influence on the software industry this century. Once IBM and Red Hat are one, it’s likely that more and more of the ideas and trends in the open source software ecosystem will seep into IBM’s proprietary software.

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