BGOV: IBM’s Planned Red Hat Purchase Could Reshape Federal Cloud Market

IBM’s planned $34B acquisition of Red Hat could have an impact on the federal cloud market and agencies’ information technology modernization plans, Bloomberg Government reported Friday.

IBM agreed in late October to pay $190 in cash for each share of Red Hat in a move to establish a global provider of hybrid cloud platforms.

BGOV noted that IBM could potentially secure federal contracts and generate interest from current Red Hat users driven by its capacity to provide cloud or on-premises services optimized for Red Hat’s platform-as-a-service.

Red Hat has seen an expanding presence in the federal market in recent years as agencies ramp up the adoption of open-source software development, according to BGOV.

BGOV assessed Red Hat’s federal transactions from fiscal year 2014 to FY 2018 and found that the Raleigh, N.C.-based software firm recorded the largest amount of contracts in FY 2018 at $131M with the Defense Department representing 50 percent of the company’s revenue in the past five years.

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