IBM Strikes Deal to Buy Linux and Cloud Vendor Red Hat for $34B

Today’s topics include IBM acquiring Red Hat for $34 billion, and humanization being key to making artificial intelligence successful.

IBM is acquiring Linux and cloud technology vendor Red Hat for $34 billion in hopes of transforming the cloud landscape, the two companies announced on Oct. 28. The acquisition is an all-cash deal that values Red Hat stock at $190 per share, with the deal expected to close by the second half of 2019, pending regulatory and shareholder approvals.

After the deal closes, IBM has pledged to enable Red Hat to operate as a separate business unit within IBM, in a manner that will allow it to work with other vendors and cloud providers.

"The combination of IBM and Red Hat, it's a game changer," IBM CEO Ginni Rometty said during an analyst call. "We will be the undisputed No. 1 leader in hybrid cloud."

At the Connected Enterprise conference last week, the topic of artificial intelligence brought skepticism.

Inhi Cho Suh, general manager of Watson Customer Engagement at IBM, said, “There are a lot of misconceptions about what AI can do in the enterprise. I would focus on really picking a specific problem.” For customers of IBM’s Watson AI supercomputer services, Suh said it’s important to focus on precise algorithms for small sets of data. 

Estaban Kolsky, principal and founder of research and advisory firm Think Jar, agreed. “You don’t get to good AI without good data; no one has.”

Another key point is that while it’s well-known that AI systems need to be taught or learn from their mistakes, these systems are also training the humans who use them, warned Liza Lichtinger, owner of Future Design Station, a company that does research in human computer interaction “The language we deliver to devices is rewiring and remapping people’s brains, and that projects into their social interactions,” said Lichtinger.