IBM Closes Acquisition of Red Hat for $34B | Hacker News Reader

IBM Closes Acquisition of Red Hat for $34B

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552 pointsvoxadam292 comments

So IBM buys Red Hat for $34B, of which $20B are borrowed monies. The debt is priced at 1.05 percentage points above Treasury yield rate [1] which would be somewhere around 3.5% which puts interest on bond debt at ~$700m every year.

Now consider that Red Hat had a net income of $433m. Even if they reach $500 this year, Big Blue will still be $200m short, every year.

At the moment, IBM is trading down at -0.5% on an otherwise slight green Nasdaq.

Just from these numbers we can conclude that IBM is seeing some pretty significant synergies in the purchase that the market isn't.

[1] https://www.barrons.com/articles/ibm-bond-sale-red-hat-51557...

> Just from these numbers we can conclude that IBM is seeing some pretty significant synergies in the purchase that the market isn't.

Or there was basically very little chance that the acquisition wouldn't go through, and since we have known about it for months, it is already priced in the current stock value of IBM, so today's trading would be mostly unrelated and not representative of what investors think about the purchase.

exactly. the impact from the deal mostly happened at its announcement October 29, 2018 when IBM fell about 5% on the news.

Which in turn can be explained by a decrease in buybacks and/or dividends and thus by lower expected ROI.

Or more likely that IBM has been screwing the pooch every which way for the last ~~20~~ 30 years.

And the market would find out about that suddenly the day they announce buying Red Hat?

That doesn't bode well for Red Hat over the long term.

Unless Red Hat cannibalizes IBM from the inside out, and there's some talk that this is exactly what they want. They may be grooming Red Hat's CEO to replace IBM's CEO.

That would be a pleasant surprise.

The price/interest/profit numbers are interesting, but this is definitely a good point too. Short-term shifts in the price of IBM aren't going to have much to do with this.

Let's not confuse accounting earnings with cash flows. Red Hat is generating a decent amount of cash ~1B in cash from operations (difference from 433M mostly due to stock based comp and deferred revenue, common for software companies).

I didn't look into the details of the deal but IIRC $34B is the enterprise value, so it probably includes a refinancing of Red Hat's debt. RH had ~20M in interest last year, so you can take that off of the 700M.

So now we're talking about 680M in marginal interest expense on a firm with ~950M in pre-transaction free cash flow to equity. Not to mention RH's 65% top line growth in 2018, we'll see if that happens again. This transaction could be cash flow positive right off the bat.

Also Red Hat is operating at an ~18% ebitda margin (did not go looking for add backs), I'm assuming IBM can get that up.

Of course, it's easy to imagine IBM just torching all of Red Hat's top line... can't rule that out.

Red Hat net income is growing pretty consistently though [0].

With this price for debt, IBM could be cash-flow positive on this deal within a couple of years even without any big synergy, just by the simple effect of cumulated growth on (net) income.

[0] https://www.macrotrends.net/stocks/charts/RHT/red-hat/net-in...

The acquisition was most likely already priced in, but I think the synergy IBM is hoping for is that they are really really good at selling to the enterprise. They have one of the most successful enterprise technology sales teams in the world. I suspect that just making RedHat's enterprise sales more efficient will be enough to boost sales.

Red Hat is an incredibly valuable property that didn't sell aggressively enough.

Just by pushing on it's customer base, IBM will make alot of money on Red Hat, both with new business and blowing up legacy junk at IBM.

I like your analysis.

One thing that may be missing is how much money flows between them.

Like, existing deals, you mean?

Yeah, like if there's a contract between them or a regular amount of spending, that's an amount of money that IBM's saving each year, but that's also money that RedHat won't be earning each year. I don't know how important, percentage-wise, that number would be for either side. I imagine any amount of money would be a far bigger deal for RedHat than IBM.

Well, it's a bit like renting an apartment vs paying down a mortgage, right? On the books they (IBM) will almost certainly still be paying the subsidiary (RH), and the subsidiary will still record and report the revenue. But IBM is now building equity with its payments up at the consolidated reporting level rather than shoveling the cash out the window.

Free cash flow may be the more important metric for this purpose. I believe it is closer to $1B/year and presumably growing?

But IBM bought RH only because they believed that the company has growth ahead. If it grows a little more than 1% a year (which should be easy) that will be enough to break even. I think that was a smart move by IBM.

> I think that was a smart move by IBM.

I wish Microsoft had purchased Red Hat, that would offer real synergy:

1) Microsoft could contribute to Ansible

2) Microsoft would control licensing for RHEL on Azure

3) We might see Outlook and Office running on RHEL. Or even Direct3D?

You are forgetting about the opportunity cost of $34 billion.

This is money used to buy large corporations, there are no other ways IBM could easily find a loan to spend $34B.

I remember someone pretty savvy once rhetorically asking why companies are always doing M&A's that seem questionable from ground level. She said because it's more fun to buy things than doing the real work of cleaning up your own company model and performance. There's some sobering truth to that explanation of corporate behavior. The illusion of growth and progress and the thrill of the acquisition can be a good short-term anesthetic. I tend to think IBM is a bit more deliberate than that, however.

You need to add back income taxes of about $80M, so they are only $120M short. Interest expense is pre-tax.

Red Hat control and discretion and non-revenue generating properties now belong to IBM.

The purchase multiple is pretty crazy, and I like that I can point to a multiple that high when suitors want to buy into my own tech companies.

But for IBM this is a net win. Paying all that interest is basically a rounding error and means they barely spent any money for decades if they so choose.

That assumes zero growth, I think ibm obviously expects revenues and income to grow from red hat over time which would justify the purchase price. Whether or not that's warranted it's a different story, but the entirely of the price justification is probably not synergies - the cloud sector is growing pretty fast in general

I think that RedHat itself and the investments in CoreOS and other tech used in OpenStack is a pretty big thing for tethering in IBM. I think it's a better fit than, for contrast, Oracle. I do hope that the RH of old and some of the other bits remain Open Source friendly.

>Now consider that Red Hat had a net income of $433m.

I wonder how much of that is from IBM anyway..

Debt is reduced when inflation goes up. Perhaps they are predicting inflation?

I don't doubt the committment of RH to Open source, but looking at IBMs rather chequered history with regards to how they look to minimize costs, there must be some concern that next time there's a bad set of results, executive management will be looking for cost savings.

There are plenty of examples https://www.thelayoff.com/international-business-machines

specific example related to RH https://www.thelayoff.com/t/ZJ4vNfo

TBH I hope I'm wrong and that IBM corporate leaves RH alone long term, but that's not the general trend with acquisitions...

As the very good comment above points out, IBM will need to cut costs very significantly regardless, as they've paid so much the interest on the debt is more than Red Hat makes.

They could easily make it up by cross selling to Red Hats consulting customers and likewise for Red Hat to IBM customers. They shouldnt have to gut Red Hat to extract additional value from an M&A. Plus other intangibles like access to talent and access to new markets in the future for both sides.

Cost cutting isn’t the only business strategy. Although one that modern (public shareholder driven) businesses became obsessed with since the 1980s.

I give IBM two quarters before they start layoffs regardless how RH performs.

IBM is all in on the multi cloud story since they missed the cloud memo, and RH openshift is their key to allowing customers to lift and shift from AWS to Azure to GCP etc.

Plus it's pretty clear they know how to do layoffs and that knowledge may be applied to RH soon to boost profitability.

So more an IP acquisition and IBM sure does know from decades of experience to recognise some company that fills a gap that has usurped their own offerings and acquired it.

You may well be right, indeed that was along the lines of my initial thought about this and would explain the size and scale of investment. Then if RH fails as they would currently to keep up those interest payments, then accountants can just rub their hands and use that debt to offset profits down the line.

Time will tell, certainly IBM has the kit and for years had its own dark fiber internet backbone globally, so have been well placed for years to capture the cloud market, yet failed to move on. Which for a company that saw a shift towards service offerings, was probably a big source of embarrassment internally at some levels.

Almost 80% of IBM's profits come from its cloud division, which is only 27% of it's business.

It seems like the idea behind the Red Hat acquisition would be to increase the cloud division revenue and keep roughly the same profit margin, which in theory could be great for their bottom line, especially if Red Hat is growing quickly (is it?).

The arm chair CEO in me doesn't see how this adds up, though. Red Hat seems pretty pricey. I just don't see how Red Hat competes with AWS, Azure, and GCP moving forward, and I don't really see how it plays nicely / fits into those clouds either. I also don't see how it would make IBM's cloud more attractive. I can see how it could make IBM's cloud more profitable, but it seems like a stretch, given what they paid for Red Hat.

Red Hat employee here, working in the cloud division. I can't speak for IBM, I'm not too familiar with it. I don't know what the future will hold.

So far, Red Hat plays in a field slightly different than AWS/GCP/Azure. Our customers mainly want something _on premise_, something on their machines, their datacenter, behind their firewall. Most of our customers don't want to, or can't, hold their data on machines they don't physically own.

I just don't see how Red Hat competes with AWS, Azure, and GCP

It doesn't. Their cloud tech, OpenShift, runs on top of the others. Kubernetes can sit on top of that. It makes private clouds portable (kind of).

Slight nitpick. OpenShift, since its latest major version (3?) is Kubernetes. It's mostly a repackaging/distribution of k8s. OpenShift can run on top of AWS/Azure/GCP, but also, most importantly, OpenStack.

Another nitpick, openshift is not a repackaging but a fork of Kubernetes pure and simple, if you look at the origin you'll see those merge patch they do on every Kubernetes releases

I stand corrected, thx.

So kubernetes turn the clouds into a commodity. And this is Red hat play. The issue here is that google (kubernetes creator) is afraid to compete with itself (aka GCP), and hence needs another player to complete the picture.

Based on market share, Google has undoubtedly run the numbers and realized that increasing cloud portability hurts Amazon and Microsoft more than it hurts Google.

From that perspective, community adoption of k8 benefits Google.

This is correct, however, kubernetes is a platform of platforms. I.e. it will hurt all of them at the end.

Kubernetes is realy a free, uncontrollable , widely installed (on prem and cloud) infrastructure, that compete directly with the clouds. Think of the iphone app store, without any apps (yet), and not controlled by apple.

The reason that companies pays for cloud services (which are 20x the real cost of hardware) is to off load the human cost in managing their infrastructure, and to get hold of cloud native infrastructure (I.e. infra as code, fully scalable).

However, with kubernetes you can create your own automatic robots (aka operator) which would replace the costly admins by taking care of application management. And at the same time you architect to a portable API layer.

We use kubernetes on my team, so I'm familiar with the FAQ. ;)

"IP acquisition"? Honest, if all the code that RH writes is open source, how can this be an IP acquisition?

Well, there's probably some intimate knowledge of RH's customer base, their needs, their goals, etc., plus whatever processes RH uses to service them. It's not tech, but not all intellectual property is tech.

I think is what people might call "knowledge capital", "intellectual capital" or some such vague term.

In my experience IP corresponds specifically to legally recognised property in otherwise copyable information.

Maybe it's more of an infrastructure + customer acquisition then. Or maybe it's about eliminating one of the few cloud competitors that IBM is capable of eliminating (not AWS, Azure, GCP).

Anyone with a neck beard better shave it, anyone with grey hairs better get a dye-job, Botox for anyone with wrinkles otherwise IBM will have them out by there ear quick.

I really hope IBM can keep their fingers out of Red Hat, if not, it does not matter how many promises they make, they will run it into the ground. If they actually manage to keep away, and let their cloud business grow without interference; they actually have a chance to grab a big piece of the cloud business.

You don't spend $34B to not interfere.

For what it may be worth: I joined in 2003 the part of IBM that was essentially the very-recent acquisition of PWC Consulting. I believe that was ~30k [1] employees ingested (compared to Redhat's <15k).

Now, my limited view and perspective is as a bottoms-up techie grunt during this period, but my very personal observations are:

1. Absolutely, PWC got assimilated over time. However:

2. For the first 5 years, culture in my part of BCS was 90+% PWC culture. Perceptible (again, from bottoms-up perspective, I'm sure lots more was brewing in the background) changes started creeping around 2007-2010 mark.

3. Today, 17 years later, I would claim it's a hybrid mix. We are clearly not the same as we were during PWC private-ownership, partnership-structure - no public company can be; but we are still different culturally than rest of the IBM.

4. Perhaps most convincingly, I'd say 70-80% of people I knew in 2003 in my part of IBM, who were originally from PWC, stayed for ~15 years. When many of them moved on ~~2017, it was for a very specific and very different reason. A whole bunch still remain though, including much of the senior management / partner / executive structure (my direct peers and management are all still ex-PWC).

Again, FWIW - there will be a myriad experiences and stories in this complex picture, but that's been my experience.

1: https://www-03.ibm.com/press/us/en/pressrelease/491.wss

I respectfully disagree - I'm a Red Hatter so you can take that for what it's worth. To me the 34B buys IBM the real estate in the open hybrid cloud market which Red Hat has built up in the last 5 years. That is part of a large and rapidly growing market. If IBM interferes with Red Hat they will likely squander the value of what we've built. If they foster what Red Hat did to win that critical ground then their 34B could stand to increase substantially.

Respectfully, I think you are being overly optimistic. I worked at a company acquired by HP several years ago. They bought us because we were beating them, and yet, they still thought they knew better, and intefered. You can guess how things ended up.

I am certain IBM will think they know better than Red Hat, and will intefere. It is in their culture. The HPs and IBMs of the world no longer innovate. They acquire innovation and sqaunder it.

34billion is a lot of money to mess around with so hopefully they will at least thing twice before trying anything too dramatic, plus Jim Whitehurst (Red Hat CEO) is going to be reporting directly in to Ginni Rometty (IBM CEO) which should help provide some aircover. In the end it will probably depend on a) Red Hat continuing to grow and make money, because why would you kill a golden goose, and b) how good Jim Whitehurst is at the inevitable corporate politics

At that level of a company like IBM, everyone is purely political. The CEO can’t necessarily force specific changes, and has to work with other senior executives who have clauses in their contracts that allow them to exit with huge payoffs if certain job responsibilities are taken away from them. Those senior executives (esp at IBM) have immense power; and will easily be able to kill RedHat by a thousand cuts or just parcel out the talent at the company.

Just poach a few key folks internally from RedHat to lead “strategic initiatives” and backfill their roles with IBM lifers. The culture will degrade accordingly.

I certainly don't want to argue or appear confrontational, but wanted to ask you this:

Have there ever been any situations where the acquisition of a smaller company by a larger one has resulted in the smaller company remaining independent? Or has there been any positives for companies like Red Hat when they get bought?

Usually I hear or read the positive-yet-bland press release talking about how wonderful this is, and how big-corp won't destroy little-corp's culture. Yet a year or less afterwards, I read stories of how everyone in little-corp has been laid off, and now little-corps applications/services are now crap.

I'm a huge Fedora/CentOS/RHEL fan, and use it every opportunity I get. I'm very, very worried that Red Hat will be gutted and defiled until there's nothing left. Which is a very, very bad thing for open source because Red Hat is a huge cornerstone of OSS development and support.

I'm also not optimistic, but I do expect that IBM leadership can understand a balance sheet. Red Hat has almost no IP, given the nature of open source development. They have a few billion in assets [0], tack on a few more for existing client relationships, brand recognition, and future revenues. $34B is a massive premium over that, so what is IBM buying? IBM's people and processes have failed to develop successful cloud strategy, and not for lack of trying. Red Hat's people and processes have succeeded, so presumably that's what they're paying all that money for. I'm hoping it's obvious to IBM that they shouldn't meddle and squander what they've bought.

[0]: https://investors.redhat.com/financial-information/financial...

I usually put it this way: "Name one company that was better after a merger."

I've yet to find any affirmative answer.

It's good to have hope, but it's not good to be unrealistic.

Pixar / Disney

Marvel / Disney

Facebook / Instagram

EBay/PayPal

Exxon/Mobil

Massive numbers of banking / pharma/ industrial mergers.

I will agree though that I can't think of a tech sector merger at this scale that worked out really well. They seem to work best at the sub $2B level.

Although LinkedIn/Microsoft is looking OK.

What you don't hear about are the dozens of companies Disney has acquired then shut down over the years. Playdom. Tapulous. Junction Point Studios. Fall line Studios. Wideload Games. Propaganda Games. Black Rock Studios.

Or the tragedy of LucasArts, which is one reason I left LucasFilm off the list.

Disney and gaming seem like a match made in heaven, but for some reason it seems like the mouse struggles to perform in that market compared to its unqualified successes in Movies, TV, and theme parks.

Are we talking about financial success, or making quality products? I get that shareholders care about the former, but as hackers we should care about the latter.

Pixar movies have become crappy sequels made to sell toys. Instagram has become an ad infested product that tries to have every feature, resulting in a confused mess. Exxon/Mobil is one of the worst things that could have happened to the planet.

eBay/PayPal is a good one that made product sense.

I’m not big enough of a Marvel fan to judge that one.

"Pixar movies have become crappy sequels made to sell toys."

Not really. Most of what they do isn't sequels, and the ones they do are great. I saw Toy Story in the cinema and loved it. My daughter just saw Toy Story 4 in the cinema and loved it. So...financially successful, and people love the movies - not sure how this is a good example, to be honest (unless the metric is "I don't like it", of course...).

Skype/Microsoft

I bite: NeXT/Apple and Pixar/Disney. I wonder if RedHat management could take over IBM...

Nope they couldn't. Apple acquiring NeXT was to acquire Steve Jobs and making NeXT the foundation of the company.

IBM acquiring RedHat is a way to play in the cloud field, not to change the complete IBM Organisation, which is huge.

I'm not entirely convinced Apple really wanted Steve Jobs back. They really needed an operating system after the failure of Copland though.

If IBM shareholders think that the future of IBM is the cloud, and that RedHat is the cloud at IBM, I would not be entirely surprised for Jim Whitehurst to replace Ginni Rometty a couple years down the road... 100% speculation from very very far away (I don't pay for anything from either IBM or RedHat).

Interesting theory. Based on history and company performance (I don't have sources for this) Rometty's run as CEO has outlasted most expectations. This is definitely an interesting thought

Youtube/Google?

Doubleclick?

Profitable, maybe, but better than before? No.

YouTube's culture and ux have slowly been killed by Google over the years, and the platform is becoming more bland and homogenized as we speak.

I doubt YouTube would have survived the lawsuits that were brewing before they were purchased. And then precedent would have been set against all video sharing sites, so the Internet would have been significantly worse off and streaming and independent content production would have been set back by a decade. I think the Google acquisition was a good thing, even if it means there are ads on videos unless you pay $5/month to remove them.

This an unjustified conclusion if I ever heard one. YouTube was acquired in 2006 by Google. That's 13 years ago.

YouTube has existed for 14 years. It's been Google nearly the entire time it has existed.

> I usually put it this way: "Name one company that was better after a merger." > I've yet to find any affirmative answer.

> It's good to have hope, but it's not good to be unrealistic.

* HP paid $4.5B for LoadRunner : https://en.wikipedia.org/wiki/Mercury_Interactive

* HP paid $1.6B for Opsware

* HP paid $1.2B for Palm

* HP paid ELEVEN BILLION for Autonomy

https://en.wikipedia.org/wiki/List_of_acquisitions_by_Hewlet...

Apple/NeXT

Exception that confirms the rule though.

Zappos, IMDB, YouTube, Twitch

So far Microsoft hasn't ruined Github. But then Microsoft has been getting smarter over the last decade while IBM has just gotten dumber and dumber.

At the risk of opening up another debate I'd say that GitHub currently looks to be doing better (more releases, more enterprise sales) after Microsoft's purchase than before. I also see them as a model of how to keep a distinct culture alive and grow it inside a larger entity. If GitHub can do it I think Red Hat can too. But only time will tell. Everything at this stage is some form of speculation.

> Red Hat is a huge cornerstone

Indeed since in another thread recently, folks pointed out that RH had taken over core functions, such as systemd, pulseaudio, dbus, gnome, wayland, significant share of kernel, etc.

The agency I work at was bought up by the monolithic AKQA, which in turn was bought by the epic proportioned WPP.

At first, that meant our one to four person operation in SF (most are in London) moved from hanging around Google offices to getting a terrible fishbowl in AKQA. Then, right when I joined, they got approved for their own space in the financial district of SF. Since then, they've been expanding rapidly, with basically no input or oversight from AKQA or WPP.

So at least in this case it seems there was no issue.

The company is Potato, by the way.

IBM had a huge push about 20 years ago to spend their resources on Linux, I believe this played a part in Linux beating everything from SCO, Solaris and even AIX and BSD out of the market.

Microsoft seems to be doing the acquisition game right. All their recent purchases of indie video game studios have been well met, but that's most likely because of the leadership of Phil Spencer

IBM is large bureaucracy. Large bureaucracy's have a lot of managers.

Managers prioritize their bonuses over long term interests of companies they work for.

It would be strange and/or abnormal (as far as big co. goes), for IBM managers not to try fuck with Read Hat.

They’re IBM, of course they will squander it. How do you think they went from king of the hill to grumbling behemoth that is constantly behind the times?

As someone who has worked at a company like that before I can foresee continual IBM management changes until you get the right combination of buiness minded leadership that will can everything at Redhat that isn’t directly related to developing what they consider obvious money makers.

>If IBM interferes with Red Hat they will likely squander the value of what we've built.

That's an argument why IBM shouldn't interfere, not an argument why IBM won't interfere...

Every company in the world is told they can keep their corporate culture after an acquisition. This never actually happens, or at least I've never seen it. Optimism that they shouldn't screw up Red Hat is just not how large corporatiols operate.

Right but if you dont want to see that 34B disappear into nothing you dont want to disregard Red Hats feedback. I hope they just ensure Red Hat gets resources they need and step back.

Pretty sure Microsoft is doing that with GitHub to a reasonable extent. Seems to me now that GitHub has more resources they can do much more than they could prior.

Squandering $multibillion investments into industry crown jewels is par for the course. As you point out Microsoft may have learned to not screw up GitHub, but the price of tuition was pretty high: $7-$10 billion for buying and destroying Nokia.

Is it the same class of leadership, or didn't they move on already?

Q: What do you get when you merge IBM and RedHat?

A: IBM.

IBM basically has control of all of Linux now. They've gotta love that sweet, sweet strategic leverage over the entire Web and cloud ecosystem.

There is a lot of truth to this. Since Fedora is the upstream for Red Hat, and IBM historically kill off anything not making a profit, how long before this happens? I wonder if they'll split the two?

Red Hat does "control" a disproportionate amount of Linux development. Everything is also now basically dependent on systemd.

I'm seeing more and more IT guys I know move over to Free/OpenBSD because they don't like the direction Linux is taking. While Linux is only a kernel, the entire userland is basically dependent on systemd.

Linux has become what it hated in Windows. A massive, bloated mess. I've always preferred BSD on the server and something else on the desktop (hurry up, Haiku!). I still wish BeOS would have gotten more traction beyond the BeBox.

Methinks the move towards FreeBSD--and it's happening in quite a few circles, will continue, especially if IBM get heavy handed with Fedora/Red Hat. I'm not worried, per se, but I am concerned, for the aforementioned reasons.

> the move towards FreeBSD

Who? Where? for what?

You mentioned BeOS. Sorry, I love nostalgia too, but I have no idea what you're talking about. Out in AWS, GCP, Azure, DO -land... it's still going to be Ubuntu, Debian, CentOS, Windows, etc for a long time.

It's all in what people are willing to tolerate or change. Obviously, the gentlemen over at Haiku feel they have something to offer, as small as it may be. I always though that BeOS was somewhat revolutionary in its approach.

I'm still somewhat bothered that Apple let their server offering go. And yes, FreeBSD replaces Linux easily. Not everyone runs their stuff in the cloud. It's not the be-all and end-all. Serious non-IT businesses are still on mainframes, BSD, and other, and there are plenty of them. A friend of mine is a COBOL programmer for a large financial house, and he's set for as long as he wants to work there, and at almost $80hr (Texas), he's making better coin than most programmers here.

> And yes, FreeBSD replaces Linux easily.

No, it doesn’t. Take any non trivial system running Linux and try to run it in FreeBSD. You may get it running in little time, however the number of issues you would have would be big.

Remember that the modern stack have multiple layers of complexity, Linux, your app, SomethingSQL, AnotherThingDb, Kubernetes, AWS/GCE/Azure, etc. Since FreeBSD is not the common choice to run those things you will probably hit a issue here, another issue there, a combination of issue in one layer with another, etc.

Yeah, this may say more about our current systems than anything, however to say that it is easy to substitute Linux with FreeBSD is simply not true.

For the core parts, such as database engines, webservers, programming languages, etc. then you should not encounter any trouble. I've done this and found little trouble.

For glue like kubernetes, yes, you're going to find differences or even lack of support for that specific tool. Ansible works pretty well, in my experience. But this is the more superficial stuff. If you're going to migrate for whatever reason, then updating the automation tooling around the systems you're managing is not that difficult.

Depends on the system. For a desktop enviornment you are correct, *bsd is at best an after thought to pretty much all projects. However "serious" server programs tend to get much more testing on BSD. I don't think you will have any issues running a database on BSD, and probably not a web server (though some web frameworks are Linux first so YMMV)

The biggest problem in "FreeBSD desktop" is not the "FreeBSD" part - that works pretty much fine.

I run a FreeBSD desktop. There are enough problems that I wouldn't install that for my family. Too many blank windows and the like (I suspect graphics driver issues but have no idea how to debug further)

Please elaborate on "more and more IT guys I know move over to Free/OpenBSD" and your mentioned easiness of migration.

I know former colleagues on the East coast and in the EU who I stay in contact with who, oddly enough, they are all looking at NetBSD for embedded HW work. We all used to work together at a small startup in NOVA, but we all parted ways about 12 years ago. All four of us did *nix stuff and more or less still do, but I'm pure SW, while they are more HW/SW integration.

These are but a few. Here in the Houston area, there are tons of FreeBSD/OpenBSD users.

> and at almost $80hr (Texas), he's making better coin than most programmers here.

Not sure about all programmers but I'm at $200 and I'm underpaid compared to my coworkers. Big telco.

You're underpaid at $200 an hour?

If I was making what my father was making at my age for doing the same job relative to the size of the economy at the time I should be getting paid 1.125 million.

Yes $200/h is underpaid, it should be what people working at Walmart get paid.

And in the world where people in Walmart are paid $200 an hour, what price does Walmart sell a jar of pickles for?

In real terms, exactly what it cost in 1980.

FreeBSD just got some big updates to improve performance on multi-core virtualised systems. I'm looking forward to testing them.

Yes, you're right, Ubuntu, Debian, CentOS etc. are the common systems in use for this purpose today. But, if you needed to, you could absolutely use FreeBSD as an alternative. And should there be pressure to drop any of these Linux systems for any reason, having alternatives right there you can switch to is very useful. As is avoiding vendor locking and ensuring there's meaningful competition.

Hobbyists move first. Speaking of nostalgia, I'm sure you remember when people would mention they were moving to Linux and were laughed at — Windows, Solaris, AIX, HP-UX, and so on were the serious server OSes.

FreeBSD is looking closely at systemd. While it is agreed it isn't the right solution to the problem, it is also agreed it solves a problem that init scripts cannot solve. Systemd as is will not (for legal reasons) ever be in freebsd, but don't be surprised if FreeBSD writes their own semi-clone that does most of the same things and implements a good part of the interface. I suspect if debian will drop systemd for the freebsd replacement a few years after it is released.

I like BSD-style init scripts; they are easy to work with and understand. I dislike this trend that systemd started. Pretty soon, everything will be a binary blob. This is one of the reasons I love OpenBSD--no binary blobs. OpenBSD runs great on most laptops with a few issues, but for the most part, I've had great success. It's very stable, easy to learn and use, and more importantly, secure. I want for nothing using it. And I show my age when people see I still run WindowMaker as my preferred DE.

People use systemd because it solves real problems that are not adequately solved by init scripts. Your "want for nothing" says more about your limited needs (which is fine) than anything else about system management services.

Regardless of one's opinions or critiques about the implementation of systemd specifically, the idea that it came up in some kind of vacuum or started a "trend" is utterly ridiculous.

Prior art in UNIX would be SMF at a minimum, and systemd clearly looked at launchd for some inspiration in other areas (systemd ended up having the goal of covering both use cases of launchd and SMF.. ie generally server and desktop).

Also what is this about binary blobs? systemd is configured with text files. Last I checked, the init process itself on BSD is a binary.

In BSD, the init(8) binary doesn't do much regarding startup - basically just executes /etc/rc; it's shell scripts all the way afterwards, nothing hardcoded.

What exactly cannot be solved with init scripts?

Also, keep in mind that FreeBSD init scripts (which actually come from NetBSD as rcng) are very different from the SysV mess Linux used to use - they handle dependencies, have a sane way of configuring way, they don't reimplement features which ceased being useful in the eighties (runlevels) etc. They are also quite fast. This means the pressure to migrate off to something else is much lower.

There are things to like about init scripts. That is why freeBSD hasn't jumped in and created a systemd like replacement. However systemd as an approach to starting services has some significant advantages and that FreeBSD wants. Smart people are thinking hard about the problem in hopes they can come up with a good compromise.

> Linux has become what it hated in Windows.

People have been claiming this for the past 20+ years that I've been working with Linux.

I'd take it with a grain of salt.

Right, because Linux is still open source. That is its main point and benefit

Apologies for hijacking but can someone elucidate the differences between `systemd` and something like apple's open-sourced `launchd` (which I'm more familiar with and which I think is reasonably good)?

Post #5 in the below link gives you what you seek:

https://forums.freebsd.org/threads/systemd-vs-launchd.44973/

This is a pretty perfect answer to my question, thanks!!

The userland is absolutely not dependent on systemd _at all_. Have a look at Devuan, and you'll see that almost all of the userland remains exactly the same. See: https://unix.stackexchange.com/q/433159/34868

Devuan is but one fork among many. It has zero traction in the enterprise space. Devuan, Gentoo, et al, are niche players. While their userlands may be "pure", they represent a minuscule fraction of Linux users.

And yes, systemd is a dependency for quite a few userland programs. Here is one of the best articles I've read on why systemd is really bad.

https://chiefio.wordpress.com/2016/05/18/systemd-it-keeps-ge...

systemd-was-init-replacement was not bad. systemd-as-kitchen-sink is where problems started. E.g., creating a binary log file format that is non-ACID, and corruption entails throwing the file away--instead of just leverage SQLite; and then not having a way to send logs remotely, so you have to run rsyslog anyway.

> and then not having a way to send logs remotely, so you have to run rsyslog anyway.

journald has its own remote gateway and can ship logs elsewhere. It's not on by default, but you can easily configure it. There are several addons for plugging in specific protocols and services into the journal.

Are you referring to systemd-journal-remote?

* https://www.freedesktop.org/software/systemd/man/systemd-jou...

I am referring to something syslog-based:

* https://en.wikipedia.org/wiki/Syslog#Internet_standard_docum...

which can be used by other tools to process.

Can you point me to documentation on how journald can be configured to send to a remote syslog server?

https://www.freedesktop.org/software/systemd/man/journald.co...

Seriously, it's in the man page.

Seriously, do you understand the word REMOTE?

From the man page:

> Journal events can be transferred to a different logging daemon in two different ways. With the first method, messages are immediately forwarded to a socket (/run/systemd/journal/syslog), where the traditional syslog daemon can read them. This method is controlled by the ForwardToSyslog= option. With a second method, a syslog daemon behaves like a normal journal client, and reads messages from the journal files, similarly to journalctl(1). With this, messages do not have to be read immediately, which allows a logging daemon which is only started late in boot to access all messages since the start of the system. In addition, full structured meta-data is available to it. This method of course is available only if the messages are stored in a journal file at all. So it will not work if Storage=none is set. It should be noted that usually the second method is used by syslog daemons, so the Storage= option, and not the ForwardToSyslog= option, is relevant for them.

That is all about local. Again: I end having to running a syslogd locally so that I can send stuff remtely using an industry standard protocol.

Your man page link confirms the capability is not there. It can forward to local syslog, which is still both useless (logging holes still exist) and needlessly redundant for this purpose.

You don't seem to have linked to any particular section of the man page. Linking the whole manual is not helpful.

Ignore SystemD even for a moment.

Check out how many projects Red Hat claims to "maintain" https://fedoraproject.org/wiki/Red_Hat_contributions

IBM could leave GNOME, gtk, and graphics stuff out to dry. After all, GNOME doesn't sell cloud server support contracts.

As a Gentoo user, I don't see how I'm impacted. What is this systemd or pulseaudio that you speak of? :-)

They are both in portage should you want them.

The key point is that they are not on by default, and AFAIK, Gentoo has committed to make everything work without them. An average Gentoo user would never have heard of systemd.

> and something else on the desktop (hurry up, Haiku!).

If you'd like us to hurry up, we could use more hands; software (doubly so clean, well-designed software) does not write itself, especially on shoestring budgets :)

Not sure if related, but I do note that Amazon EC2 now has an Ubuntu stack option for their lowest tiers instead of their default, weird, not-always-well-supported fork of RHEL that they've been using since inception.

I believe this offering appeared in April.

IBM also put in billions of dollars into Linux. They (along with many many others) are part of the reason Linux became commercially successful.

https://www.wsj.com/articles/SB976650399196757666

Not really. The IBM Academy reported that open source software was the single biggest threat to their business model, so they "invested" in Linux to keep their foot in the door. They've had mindshare at Apache and Redhat for almost 2 decades now. I don't think they'll make any money from that investment.

IBM is a consulting company, and the open source business model is all about consulting, so I don't know what threat you're referring to. In any case, while you may use air quotes, they invested actual hard cash at a time when Linux was struggling to gain a foothold and was not considered a serious UNIX challenger. I'm not saying Linux owes them everything, but it sure does help when a giant company like IBM backs you.

I guess I should have said "When I was at IBM, the academy released a report, etc." No air quotes, required; I was there. I was on the open source community of practice core team at the time.

I still don't see your point or what you're disagreeing with. But anyway, thanks for your comment I guess. Have a nice day..

My point is that IBM didn't invest in open source to improve it, they invested to take advantage of it. Open source software was still frowned on since "free" was a dirty word in that culture. We never sold it in our deals. The explosion of innovation and creativity created by the open source community never reached IBM. We just kept selling Websphere and Domino. I think it was 2008 before CENTOS started creeping into our solutions. IBM did not buy Redhat because they believe in Linux. They did it to buy market share.

Sarcasm? If not, I’d say Debian and Ubuntu still have a large market share and most Linux is still open source. Perhaps you mean Enterprise Linux?

I don't think he was being sarcastic. systemd came from Red Hat employees. It's now effectively everywhere, even in Debian and derivatives. This is not meant to be a systemd sucks rant, but if a distro is using systemd, and most do, they are using Red Hat-developed software, and a most critical piece at that. Gnome, the usual DE for enterprise Linux installs is heavily tied into systemd now. It goes on and on.

It's not in Devuan. With some community effort - that means _you_ - putting pressure on Debian to reverse their decision, it can go out of Debian, easily.

You do not understand how Debian works. Those who do the work make the decisions, not some random HN posters' "pressure".

The sun will blow up before Debian reverses their decision.

Did Devuan ever get their build servers back up after they did a childish aprils fools day joke?

>IBM basically has control of all of Linux now.

Is this really true? It seems to me that a lot of the people who control the direction of Linux might work at RedHat and IBM, but that can change. It has in the past and it will in the future, billion$ acquisitions don't make them immune.

> Is this really true? It seems to me that a lot of the people who control the direction of Linux might work at RedHat and IBM, but that can change. It has in the past and it will in the future, billion$ acquisitions don't make them immune.

There's a history of companies simply acquiring the competition:

1) Ansible was written by a former Red Hat employee, and then Red Hat simply acquired his company.

2) Centos was an open source alternative to RHEL, and then Red Hat simply acquired the company.

Those are all projects where those organizations control all of the development, aren't they?

This is a great move for both companies. The doom and gloom in this thread is depressing.

RedHat gets access to IBMs massive sales machine and IBM picks up a number of key technologies. Win-win.

The problem with any M&A is no different than what happens in marriages - do the two blend together, does one dominate the other's culture, etc? The truth is that IBM's history (and to be fair, almost all 10-figure+ market cap tech companies) even with multi-billion dollar acquisitions (that's almost all they do with the exception of Google and Apple I can think off the top of my head) is that the current company's inertia dominates whoever they acquire and the internal sales-driven culture in developed markets supersedes anything resembling engineering related from a company they acquire. Sometimes IBM gets ripped off too but wishful-thinking top-down thinking instead of a more critical, measured engineering oriented focus is typically not consulted even for absolutely essential company initiatives internally.

Disclaimer: former IBM employee with short tenure with a failed acquisition by every definition of it

"the current company's inertia dominates whoever they acquire and the internal sales-driven culture in developed markets supersedes anything resembling engineering related from a company they acquire"

What engineering-related innovation has RedHat come up with?

As a Linux sysadmin I've noticed that all of the companies I've worked at that have used RedHat chose it not because it was innovative but because:

1 - they could get a support contract

2 - because RH dominated the commercial Linux space

3 - because RH was the OS the admins knew and both wanted to leverage that knowledge and keep their knowledge current for continuing work with this market leader in future jobs (as that was likely the OS they'd use in most jobs to come)

Most of the "innovations" I can attribute to RH have been widely seen in the sysadmin community as negative. Innovations such as systemd, Network Manager, and selinux. The latter two we've often turned off because they caused so many problems. Unfortunately, systemd was too integrated in to the OS to be able to turn off.

There's RPM, but that was created decades ago when RH was not the company it was now, and it's just one packaging format out of many, and not one that IBM even needs to spend billions to buy. The only other positive tech that RH owns that I can think of is Ansible. But they didn't create it. They bought it.

What RH-originated innovations should we impressed by?

The engineering culture is not solely determined by the innovations the company has come up with, so I don't really see the point of the question you ask, with regards to the statement you quoted.

When you say that "most of the innovations [...] have been widely seen in the sysadmin community as negative", well, that can only be true in your own sysadmin community. If you replace "innovation" by "contribution", and make the list include everything RH works on (SELinux, NM and systemd are really a tiny part of it), the sentence becomes factually incorrect, even in your own sysadmin community (I hope).

Also, systemd was not created by RH (LP was not employed by RH at the time), and SELinux is from the NSA's TRUSIX. Labeling SELinux as a "negative innovation" is very weird (not that whole sentence isn't).

When you say that RH's only "positive tech" is Ansible, but that it was an acquisition, that's true for mostly everything RH participates in (Ansible, but also systemd, OpenStack, Ceph, CoreOS, GlusterFS, KVM, LVM/DM, gcc, gdb, systemd etc... were acquisitions or acqui-hires), so I really don't see your point. Does the fact that all of this software originated from somewhere else than RH negates the existence their engineering culture ?

EDIT: made quotes inline

If the bulk of RH's tech was acquired and did not originate with them then why is their engineering culture even relevant? What engineers work by acquisition? That doesn't sound like engineering to me but business.

Now, if you're talking about the engineering cultures of the companies RH acquired, if RH was able to preserve the engineering cultures of the acquisitions they made, why can't IBM?

Also, if by "engineering culture" you're not actually talking about any innovative products that RH itself came up with, but rather the contributions that RH engineers made to open source projects like gcc or the Linux kernel, IBM has done a lot of that too. I'm not sure why that wouldn't continue under IBM's stewardship of RH.

I feel bad for having inserted myself into this discussion. I think I'm actually agreeing with you here, in that there's nothing that shows that IBM couldn't preserve the culture of its acquisition. I just wanted to comment on what I thought was a statement on their engineering culture.

Personally, I just hope that RH can preserve its engineering culture. I can't say anything on whether it will happen or not, because I don't know.

systemd was created when Lennart was a Red Hat employee, for the record.

I stand corrected. There is something wrong in Wikipedia, as he's cited as working for Red Hat since 2011, while systemd was created in 2010.

I suppose that nobody could find another source than him saying that he works for Red Hat in a FOSDEM 2011 interview.

If you have such a source, I suggest correcting Wikipedia, as it may induce others in error.

https://lwn.net/Articles/299211/ is from 2008. This is the first pre-systemd source I could find, but PulseAudio became the default in Fedora about a year before so he might have been employed at that time, too.

> The only other positive tech that RH owns that I can think of is Ansible. But they didn't create it. They bought it.

Ansible was created within the Fedora Project (owned by RH) as "func" originally. The creators left RH to found AnsibleWorks, which was then acquired by Red Hat in 2015.

SELinux is not purely Red Hat innovation, it largely came from the NSA's Trusted Systems Research Group[0]. That said, you shouldn't be turning off SELinux. Its like saying you should just chmod 777 all your files as you otherwise cannot figure out why your web server won't host your PHP script. On a basic level, it really doesn't take too long to figure out how it works and how to get whatever you're doing play nice with type enforcement.

Perhaps the surface area business value proposition to paying customers is the incorrect place to look for innovation? RedHat has done a tremendous amount for the Linux kernel over decades, and Ansible was basically a RedHat employee project that was made in response to frustrations and spun out and came back into its fold. Also, prior to the advent of yum (RIP Seth Vidal) rpm was all we had. A lot of "innovation" isn't even hardcore low-level engineering as much as standardization and stewardship - none of these things IBM has been known for since the late 80s perhaps. Selinux was also originally an NSA research project that was adopted quickly by RedHat because most of their customers are security-focused (at least on paper).

Not going to disagree that a lot of what RedHat has championed recently has been controversial. What kind of innovation isn't controversial though until usually many years afterward?

Also, cultures can be relative to each other and are not definable in single dimensions. But nobody besides the most Kool Aid soaked of IBMers could say that IBM is more of an engineering-centric culture than RedHat.

> that's almost all they do with the exception of Google and Apple I can think off the top of my head

I'm not sure how well Google fares either. I mean YouTube is a success story but Boston Dynamics & Motorola are pretty sad outcomes.

With RH and IBM - they were competitors. So, for everything RH does there is an alternative in IBM (operating systems, application software, Java, etc.). Corporate fiefdoms are not so easily dismantled or pacified :)

IBM has been stumbling around trying to find its feet again for a while now. It seems possible that despite the advantages you cite that IBM won't know how to use them.

Word from the inside is that IBM's own "sales machine" selling Watson for what it really wasn't ... was a great deal of the problem with Watson.

The skepticism about IBM is rooted in their recent history.

Yeah, I have worked for two companies that were sold Watson as a cure all for their problems. I have never seen it actually do much of anything. Definitely nothing that could not be done with any old set of etl tools.

Yeah, whatever happened to Watson? I haven't really heard much in a couple years now..

Disclosure: I'm an IBM employee working on legacy enterprise architecture absolutely nowhere near Watson. If modern stuff is on the left side of spectrum (AI/ML, CI/CD, Javascript and web frameworks etc), I'm somewhere at the edge of solar system on the right side of the spectrum :)

That being said, my personal impression from the market, and completely unauthoritative, is that Watson is a brand-name, NOT a single product; it's a collection of products, some built, some purchased, some integrated, some stand-alone, some simple, some complex, under the AI/ML/"Cognitive" umbrella. Most companies have branding/pillars - in IBM, Infosphere used to be information management, Lotus was collaboration and communication, Rational for project management / testing / modelling / etc, and so on. So you have "Watson Predictive Analyzer" and "Watson Chat Service API" and "Watson AI Doodad #37", etc where you can seamlessly take out Watson, replace it with IBM or not at all. There is no single Watson product that I'm aware of. Some stuff was likely even re-branded from previous analytics/BI into Watson branding as deemed appropriate.

Globally-intentionally or not (opinions differ wildly), market perceived "Watson" as "that big machine that won Jeopardy" - a single drop-in product, as opposed a suite of independent products that can certainly do many things, but need hard work at data cleansing, formatting, modelling, testing, etc to do useful things.

I mean, cognitive/watson/AI implementation projects seem to be order of magnitude faster than my experience with Enterprise Architecture projects; but still not a "plug in box, push button".

My $0.01CAD :)

Word from the inside is that to successfully utilize Watson a lot of careful work has to be done with managing and formatting data... and to some extent experimentation for any given solution. This requires a lot of time from IBM, and a lot of time / resources from the company who buys it.

However, Watson was sold and advertised as more of a drop in solution with a lot promised of results that Watson has never produced.

Accordingly the massive costs incurred by customers were unexpected and the processes to do it right rushed, customer expectations were not met (quite the opposite) and the results were often quite poor.

IBM seems to have backed away from all those grand claims.

Most healthcare professionals I've spoken to consider it an absolute joke, it's apparently a bit of a laughingstock compared to its grand claims of diagnosing all the cancers

It's still around, but now it's generally being sold as what it actually is - an NLP framework for building chatbots and search engines - as opposed to magic sentient AGI that can solve any problem.

Yeah, it'll be great. I can't wait until IBM pushes Red Hat customers to migrate from git to IBM Rational ClearCase.

I think the challenge is that the IBM team have been literally selling products competing directly (but far less well) with what RH has on their truck. IBM+RH need to formulate and socialize a clear and consistent cloud, product & consulting strategy ... and then they can execute. If they get this out there quickly, they are likely to do quite well. If not -- and this seems more likely, given they should have had this material ready before announcing their intent to acquire -- I'm less confident.

People are horrified because IBM is a sinking ship and a monolithic big business that will attempt to look at everything from a fiscal perspective with no real love for what made Redhat great. Is IBM really going to give Systemd, Fedora, the full time kernel maintainers a break and pay them to make “unprofitable” software?

We’re also seeing the end of independence that was making the open source model work with dignity. It was a huge milestone for the company and many people view this as a regression.

IBM spends so much on R&D. I am not sure if the company is solely focussed on short term profits.

IBM spends a fraction of what other household names spend.

> That’s according to an analysis by Recode, which found the e-commerce giant [Amazon] spent nearly $23 billion on R&D in 2017. Technology companies rounded out the top five, collectively spending $76 billion on R&D last year. The other tech companies that spent the most on R&D were Alphabet (GOOG), Intel Corp. (INTC), Microsoft Corp. (MSFT) and Apple Inc. (AAPL). Alphabet was in second place with R&D spending of $16.6 billion while Intel had spending of $13.1 billion and Microsoft spent $12.3 billion. Apple rounded out the top five with $11.6 billion. Meanwhile, Johnson & Johnson (JNJ) spent $10.4 billion while Ford Motor Co. (F) weighed in with 2017 R&D spending of $8 billion. Potentially telling, International Business Machines Corp. (IBM), once the innovator in techland, spent the least at $5.4 billion. (See also: IBM Traders See Stock Plunging 20%.)

[0]: https://www.investopedia.com/news/amazons-23b-rd-budget-sets...

Just to note, the Amazon figure does not seem to be comparable to others.

Amazon does not report R&D spend, but “Technology and content” spend. This includes for example AWS infrastructure.

https://www.fool.com/investing/2018/06/13/how-much-does-amaz...

So half of what Apple spent? That’s hardly damning.

"R&D" is a bit of a misnomer in the software world. Lots of things are technically R&D that you wouldn't think of as R&D

What's the antibody response? Can someone else pick up the mantle of wrapping Fedora in an Enterprise offering?

> This is a great move for both companies. The doom and gloom in this thread is depressing. RedHat gets access to IBMs massive sales machine and IBM picks up a number of key technologies. Win-win.

If you review HP's acquisitions, you can see the "worst case scenario."

IE, what if they just drive the acquisition into a ditch?

When I worked at HP, we saw lots of customers who needed automation software, and it seemed like nobody at HP was even aware that we offered a competitive product. (Opsware aka "hp server automation.")

https://en.wikipedia.org/wiki/List_of_acquisitions_by_Hewlet...

IBM now has control over systemd, and as other users here point out, also pulseaudio, dbus, gnome, wayland, and a significant share of kernel.

IMHO this is a good time for the Debian project to reconsider the decision to rely on systemd. If you also think so, consider letting them know.

If you think employing open-source maintainers gives a company "control" over a project, you haven't met many maintainers.

In any case, IBM is very respectful of the health of the open source projects on which it depends. While the vestiges of Red Hat may become less and less attractive as a place for a maintainer to work over time, I do not expect IBM to exert any control over any of these projects in any meaningful way any more than it has over the areas that its current employees maintain. Look at SCSI in the kernel, or even RCU, both maintained by IBMers (two examples among many).

(I worked at IBM in its Linux Technology Center for over a decade)

Is there really any likelihood of that happening? If Torvalds got cold feet about systemd and started making it less integral to the upstream kernel (or at least more walled off as an optional subsystem), there's a chance Debian would take that as an opening to move in a non-systemd direction. But as long as the upstream kernel imports more and more systemd-related stuff and treats it as the default/expected configuration, and then things like desktop environments follow suit and depend on it, Debian would need to maintain what amounts more and more to its own fork of the rest of the Linux world to do otherwise. When this was last discussed, most Debian developers didn't think it had the dev resources to do that.

That makes no sense. As long as Linux is concerned, systemd is totally irrelevant: it is not "integrated" in the kernel in any way and cannot even be considered a subsystem.

Aren't all those things GPL?

Can they not be forked in the case of a sudden change of direction that Debian, or anyone else disagrees with?

What do you mean by "control"?

redhat holds most of the expertise on those projects, so forking them, while possible, would be hard. Debian and Canonical would probably have an easier time developing something from their own expertise rather than relying on a 'once things get bad' fork.

Forks historically only really work if the fork comes from within.

Feel sad, I know it's just the way things go in big business, but watching a prime example of a fiscally successful company built on open source who has committed so many resources to kernel development and making the Linux community better get bought by a beached whale like IBM just shakes me.

I run Red Hat's Developer program, our developer tools portfolio and our developer relations team. When I first heard the news I had a similar reaction. But I've worked with IBM'ers in open source projects for years and they've always been great contributors. Perhaps more importantly both IBM and Red Hat are very committed to not changing our open culture and open source development model. That's been the source of our growth and why IBM felt we were worth 34B. Ultimately words are cheap, so if you see Red Hat's actions in the open source community changing please say something - I for one am committed to continuing to work the open source way.

You can read my blog post and comment here: https://news.ycombinator.com/item?id=20391504

Open source doesn't make money, you're at IBM now to save their failing cloud business. If you can't do that, expect your time on open source to dry up.

Open source creates market share, that's the foundation on which money can be made. Red Hat's business model wasn't charging for the open software, it was charging for the expertise we have in supporting that open software. The more market share the open source software has, the greater the monetary opportunity for us and the more we can put back into the communities. Red Hat has offices in ~40 countries and IBM is in ~175. That's a lot more touch points for us.

Open source absolutely does make Red Hat money, billions of dollars a year.

Open source doesn't make them that money, servicing open source does.

How will they service open source if they stop funding its development?

I'm assuming that you're implying that's what IBM wants?

>Open source doesn't make money Well $34B is a lot of money!

I have no specific bad feelings about IBM, but I don't like the constant drive towards consolidation.

It makes us worse off, I feel. Nearly all these big mergers are about cornering markets, reducing competition and avoiding innovations. At best they're about finance shenanigans.

It's not as if redhat customers are likely to be excited about this.

I agree. I think there's enough evidence at this point in time to show that corporate consolidation after a point is no longer beneficial to our society.

After a certain point, it's pretty clear to me that consolidation only benefits a few significantly invested shareholders and no one else. I suspect this is somewhere greater than the "big 4-5" we've become accustomed to accepting in every sector, when economies of scale stop showing significant sizable benefits to consumers and the market at large. Instead, it turns into pure financial strategy to maximize the few most significant investors' ROI which becomes significantly disproportionate to their contribution to society.

Antitrust cases are quite slow to react to these circumstances, be it intentional (financial influence in government) and or structural (government intentionally moves slowly).

Antitrust can't be left in the hands of courts. For one thing, the practices legally defined as "trust" behaviour are, to an extent, specific to time, place and time and industry. Laws made for railroad and raw material trusts are not really applicable to operating systems or social media.

A second reason is that practices evolve around legal limitations. Monopolies can stay on one side of the legal letter, and that evolves over time.

To actually deal with trusts requires legislation specifically tailored to the monopolistic tendencies of (for example) the 2019 tech sector. Maybe "data share" needs to be a concept like market share is/was.

Where is this evidence you are talking about?

This acquisition has the potential of IBM using RH to disrupt the cancer of putting everything on AWS/GCE/Azure by pushing open source-based models.

If there is one thing that’s obvious, it’s that people in this thread have very little imagination of the benefits of teamwork and conjoined efforts. The only thing this is evidence of is the shocking ignorance about businesses.

In the future, considering that it hasn't happened yet.

What are you talking about? GP said there is already “enough evidence”.

At least it wasn't Oracle?

All companies will end up sucking in the end, because they're all in it for the money, and you can always make a little more money acting unscrupulously. Oracle, IBM, Microsoft, Google - they're all essentially one company, at heart.

---

I like the Walrus best," said Alice, "because you see he was a little sorry for the poor oysters."

"He ate more than the Carpenter, though," said Tweedledee. "You see he held his handkerchief in front, so that the Carpenter couldn't count how many he took: contrariwise."

"That was mean!" Alice said indignantly. "Then I like the Carpenter best—if he didn't eat so many as the Walrus."

"But he ate as many as he could get," said Tweedledum.

This was a puzzler. After a pause, Alice began, "Well! They were both very unpleasant characters—

I agree that all profitable companies share similar characteristics and have a similar baseline for malice driven by profit, however, there do exist worse companies. I feel like Blackwater was a much worse company than Oracle will ever be and Oracle is much worse than most of the companies on that list.

+1 for storytime

That I feel is just hyperbole, too many people tend to think this deal is some kid of death warrant to Red Hat, but in reality it is only going to strengthen it by adding more and providing support, both financial and managerial to any dearth of resources that may come around ope source companies, that is if IBM can keep their hands out of the technology and management of Red Hat. I think and hope they will be wise about handling things and learn from companies like Oracle who are now infamous for obliterating good technology.

>I think and hope they will be wise about handling things and learn from companies like Oracle who are now infamous for obliterating good technology.

That's the problem with your thinking and people like you in this thread: you're entirely banking on faith that IBM won't ruin RH, even when you cite a great example here about Oracle making similar acquisitions and running them into the ground. Seriously, what makes you think IBM is going to be any different?

Just their word, and I also said I hoped they kept their word.

I'm just trying to be optimistic in this case, although I agree with how acquisitions always run into the ground regardless of the company, but something tells me IBM would think twice about doing something remotely like that to RH. For one thing, they contribute excellent work into the kernel and some of their senior engineers have had pivotal roles in adding components to the kernel which may have been a significant factor in improving it, and a minor testament that they care about the system as a whole. That doesn't guarantee anything but it is quite evident from their perspective that they are just looking to both increase their foothold in the industry and improve the base system.

There is little reason to compare IBM to Oracle, they have a very long history of their own acquisitions. I make no claim to understand what most of these are or how they have fared, but the list is public: https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...

and the purchase was made on the costs of employees performance. a major reduction of people movements, bonus, enchanges, etc. happened at the exact cost of the declared purchased (internally it was reported 18bi, now it is published 34bi). whole european workforce was impacted.

I mean, Red Hat has 12,000 employees already (granted IBM has 200K - edit 350K, see reply). Red Hat is not a small start-up.

ibm has 350k employees.

Yes, I am shocked too.

Who will be developing the lion share of what makes "the Linux desktop?"

If IBM wants to ever make money of this deal, the only way available for them is to kick everybody, but support people, and crank up fees to the max from big corporate clients.

Ubuntu has certainly stole the crown of "the server linux" as being built on a more sound foundation, and being more conservative in bringing disruptive novelties — something that just any sysadmin likes.

Red Hat's commitments to the open source projects it works on from linux, to kubernetes, to java, and many others will remain unchanged.

Without a timeframe, that statement is worthless.

And that timeframe might be shorter than you'd think. My guess would be "days".

> And that timeframe might be shorter than you'd think. My guess would be "days".

Any evidence to back up your guess, or is it just the hunch of some dude on the internet?

Unless those commitments are in the form of formal contracts, written down, then I would not place a great deal of faith in them. Unless they have legal obligations to abide by them, then IBM don't need to keep them.

I hope so, but how will IBM make money then?

Red Hat is already making money with the current business model.

Does this acquisition open up the market for a Linux company to move into the Linux enterprise space?

Maybe Ubuntu could pivot into this space.

Probably Ubuntu will be bought by Microsoft.

With the cloud, especially containers, there is little future in a business that involves paying for operating systems licenses.

Most interesting is probably supporting legacy versions of operating systems for customers who value compatibility to be able to continue to run existing applications with the minimum changes.

I sort of agree with this. Either Microsoft will purchase Ubuntu outright from Shuttleworth or they will just create Microsoft Linux, in whatever form that is, probably something more container focused than a general purpose OS.

https://github.com/microsoft/WSL2-Linux-Kernel

"Microsoft will purchase Ubuntu outright from Shuttleworth or they will just create Microsoft Linux"

I'm pretty sure since like 2 years they're working on at least the second, but the purchase of Ubuntu too doesn't sound that absurd to me. What really concerns me is their power as a big corporation, which could play a role in attracting a growing Linux user base to their distro. This could lead to disasters should Microsoft pollute their OS with proprietary extensions: developers writing software for Linux on a MS branded Linux would create software that "runs better" there or wouldn't run at all on others.

No conspiracies here, this happens every day in all offices when printers refuse to work with non same brand ink cartridges; so let's say tomorrow Microsoft ports a significant part of their windowing object model to Linux - to their Linux - as a closed linkable blob, then update their development systems so that one can develop full desktop linux applications with the same graphics interface model of the Windows ones. Technical issues aside, how many developers would resist the temptation? And how many of them would keep dual booting when they could build a career by working exclusively on Microsoft Linux?

This is pure speculation of course, but I have this feeling that Microsoft becoming a top Platinum Member of the Linux Foundation was the corporate way of slowly getting to the captains chair.

Microsoft has at least two Linux distributions: Azure Sphere and Azure Cloud Switch. And their own Kernel fork for WSL 2.

>they will just create Microsoft Linux

This sounds like something right out of a dystopian nightmare I might have had in the early 2000s.

http://mslinux.org/

Quite literally!

I predict that Ubuntu, Hashicorp and/or Docker are acquired in the next year. I could see Microsoft acquiring any of them.

Leaving only Debian as an independent popular distro maker sounds bad for the game.

I've sometimes found myself wondering what kernel is actually running Microsoft's new "Modern OS", and if the userspace has any Ubuntu input.

Hello from Redmond. It's all good old NT under the hood. NT is in Azure, XBox, anything which MS builds really. What is interesting is that Windows Subsystem for Linux v2 will actually run a Linux kernel in a VM. I guess implementing a syscall emulation layer for all of Linux was too much, but they still did a very impressive job.

WSL 1 allows for more security. What they should have done was map WSL users 1:1 to Windows users (Wine users work like that). setuid(), seteuid() and/or capability elevations would raise an UAC prompt as if they were called from Windows.

UAC is not a security boundary, unfortunately :(

I have thought and wondered about this for a while. It would make things interesting if Ubuntu had the resources of Microsoft but would be allowed to be independent in regards to the OS itself. If they wanna push Azure thats ok. You dont necessarily need to use Azure to use Ubuntu if you dont want to.

That would be hugely ironic considering https://bugs.launchpad.net/ubuntu/+bug/1. Then again, Shuttleworth spoke pretty positively about Microsoft when he closed the bug: https://bugs.launchpad.net/ubuntu/+bug/1/comments/1834

Red Hat's business model and open culture isn't changing. We will remain independent and I look at this as an opportunity for more people to engage with our stellar support and field teams.

For some context you can read the email our CEO sent out to the whole company today: https://www.redhat.com/en/blog/jim-whitehurst-email-red-hatt...

I remember a very similar email from my company's CEO during a merger. Within months he had retired with millions and everything had changed. I sincerely wish Red Hat and your work doesn't fall victim to a similar fate, but IBM literally owns you as of today.

That sort of depends on whether the CEO will remain in the company or not, and which incentives he has to continue to perform

The CEO doesn't have full control over everything. Plenty can (and did) change even without a change in the CEO. Again - they are literally owned by IBM now. I'd be optimistic if Red Hat really were to be fully independent with respect to products. But unless IBM made this investment purely as a financial strategy, they will absolutely begin interfering.

Wish you luck, but strongly suggest you remain realistic about how this dance goes, simply for your own sake.

Thing is, IBM has been around for a long time and has a long history of acquisitions. They've done it enough that there's a process. My suggestion would be to go through this list and decide which one looks most like the situation in which you find yourself.

https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...

If you were feeling like a little research, you could probably even find the names of some folks in a job role like yours who were there at the time and see what happened to them post-acquisition.

The only one that looks remotely similar is PWC consulting.

I think there's some confusion here: your company just got bought, which means that you stopped being independent.

"Red Hat's business model and open culture isn't changing. We will remain independent "

Oh, man, wouldn't it be pretty to think so?

In all seriousness, this is an INSANELY naive statement. It doesn't matter what IBM says, and it matters less what the Red Hat CEO says. You got bought. They can, and will, do whatever they want, regardless of what lip service they pay to independence or preserving culture or whatever.

They've just spent $34billion for what is essentially a culture and a customer base (all the software is open source, and the building are leased), so yes they absolutely can do whatever they want but burning it all to the ground is going to cause some interesting questions about exactly how that increased shareholder value. It could all fall apart but IBM management have a massive incentive to make it work.

Having worked for a company that got bought out for the "culture and employees", I can tell you that's a lie. You got bought out for the partnerships and technology, and everything else is a bonus. You will fall in line with the IBM culture, or you will be phased out. If you're not a salesperson, I'd suggest you spread your resume around.

No. Individual managers at IBM have strong incentives to meet their own comp plan incentives, and that's it.

Can you point to any acquisition EVER where the acquired company remained "independent" for a meaningful amount of time? Or where the smaller firm retained their own culture? It doesn't happen.

This seems like wishful thinking. These are exactly the same things that are always said. You may be fine for a few weeks, a few months, or even a few years, but IBM will inevitably interfere enough to cause a serious culture shift (or collapse).

> Red Hat's business model and open culture isn't changing.

The old management maxim will hold true:

If nothing will change, why fuck with the formula?

Of course Redhat under Big Blue will change, considerably.

Red Hat culture hasn't been anything to brag about. They basically maintain an outdated version of Linux that companies only pay for to get support and shift liability, but there is nothing innovative about Red Hat Linux.

I guess that's how it looks for students.

Ex-IBMer here...

I'd really suggest finding one of your colleagues that's seen IBM's track record with acquisitions and pick their brain a bit. They'll have much more relevant information for you than your old CEO.

You're in for a surprise then...

Oh honey... You may get 2-3 good years, but IBM VPs will swarm in and try to kingdom build -- its only a matter of time.

> Maybe Ubuntu could pivot into this space.

Canonical is already in that market and has been for a long time. I work for Pivotal, we have a contract which gives us all-the-gold support for Ubuntu, because that's what we're shipping to our customers.

Disclosure: Pivotal competes with Red Hat/IBM in the cloud platform market.

Ubuntu is making a lot of money from cloud and they probably see that as the future rather than enterprise. (They get a few pennies for every Ubuntu VM spun up on AWS etc).

I think the market is probably there regardless. It's not necessarily an easy market, but it's a class of service that fulfills needs and I think demand will be there if you identify and solve the right problems.

Enterprise is hard though, for total outsiders.

Share price was $187.71 prior to the announcement. As posted in the article - $190/share agreed purchase.

And to give even more context, it was $170.00 back in Oct 29 when it was first announced. Thus, if you bought then and sold now, you'd have a 11.7% return in 8 months. The S&P index would've returned 12% in comparison.

Not risk-free by any means, but almost certainly less risk than buying the S&P index during that time period. There was a reason Warren Buffett parked a ton of cash into Red Hat stock after it was bought.

Is it less risky? Say a decent chunk of your portfolio in a single stock? And something weird happens during due diligence , not only is the acquisition over - the stock will bomb.

Not sure how often acquisitions fall through after being announced, I assume very low. But still seems similar or higher risk then a stock fund.

Redhat has a 20year history as a public company, it's very unlikely that there'd be a big surprise in due diligence.

I think the worry was less due diligence and more a weird anti-trust case from USA, China, or Europe.

I saw (felt) this happen.

Worked for Acxiom when they were to be bought by Silverlake. The stock shot up to near-sale-price levels, where I should have sold (but did not). The deal came unraveled, Acxiom stock dropped like a rock and the company had a reputation as 'damaged goods' for many years.

Lesson: There is a small upside, but a massive downside that can materialize.

Doesn’t happen a ton but yah it sounds rough if it does.

Maybe similar risk profile to local government bonds. Common case you can a few %. If your town goes flint you take a big haircut.

$116.68 right before the announcement! The $172 was the immediate jump.

https://finance.yahoo.com/quote/RHT/chart?p=RHT (See Date Range controls.)

I think he meant "announcement of the closing", which I agree is a bit confusing

There's a lot of market timing in that number. 2018q4 had huge volatility in the stock market. Market dropped 10% during October.

One can only hope IBM does not mismanage Red Hat. They will certainly twist workflow for their benefit. Owners will probably get a well deserved windfall.

We're all watching Microsoft with GitHub. . . it'll be interesting to see how the tech industry evolves over the next 5-10 years.

Here's the official announcement from Red Hat Developer: https://news.ycombinator.com/item?id=20391504

Hopefully this helps validate the red hat model to spur more investment into the space and create a new crop of competitors to fill the void after IBM ruins red hat.

I really hope so too. To me this is a huge signal that open source has won. That alone is exciting.

Who is likely to fill the void?

Prev. https://news.ycombinator.com/item?id=18321884

i'm just a lurker and i have a lot of respects for this community but why some of you acting like somehow RedHat is not going to make money anymore after IBM bought them.

RedHat already make billion doing what they do now. Why would that change? IBM is basically a consulting company and adding RedHat is more than a perfect match since RedHat main business is selling supports.

this thread just wow.

Both companies have very different, even incompatible cultures. And it's not part of IBM culture to buy a company and not integrate it.

Specially, IBM is used to much fatter margins than RH's market allows.

IBM does not integrate companies beyond putting their logo on stuff. Look at the weather company and Softlayer.

A different source with the same news: https://www.cnbc.com/2019/07/09/ibm-closes-its-34-billion-ac... .

What does this mean for centOS?

I was going to say that CentOS is independent from RedHat, but then I realized I don't know what I'm talking about.

From CentOS wikipedia page:

> In January 2014, CentOS announced the official joining with Red Hat while staying independent from RHEL,[7] under a new CentOS governing board.

So, good question!

After taking over they are now slow to ship new releases. It doesn't really make sense to use CentOS unless you may need to pay for RHEL support.

It would be curious to see how Red Hat OpenShift works with parallel to IBM Cloud Private. Both offer same functionality to the customer and IBM invested so much amount revenue and time into IBM Cloud Private, so would they co-exist or merge into one offering is something worth a watch.

Openshift - https://www.openshift.com/

IBM Cloud Private - https://www.ibm.com/cloud/private

At least 80% of ALL acquisitions destroy value. IBM has overpaid just like the vast majority of M&As.

Is Red Hat's strategy multi-cloud or hybrid cloud? In other words is it easy enough to run your RH cloud-applications at the same time on all of AWS, Azure and GoogleCloud?

Or are they "hybrid" in the sense that you can run your apps both on-premises AND a CHOICE of Azure, AWS etc. ?

The answer is "it depends". Their main offering in this space is OpenShift versions 3 and 4. They have different underlying management planes. v3 is on a bunch of different clouds, v4 is still catching up but probably will within the next 12 months or so.

Disclosure: I work for Pivotal, a competitor in the same space (most directly through PKS).

These aren't really exclusive (although they might be), right?

The title looks wrong.

Great for Open Source?

Bam!

I think it may have been RHAT's plan all along to get bought by IBM.

Not so sure why this is being voted down.

RHAT has always been seen as an anomalous case of an open source company that has done well on the stock market on a sustained basis.

All along they were working on things that IBM lacked, waiting for the day that IBM would be floundering and would need a big acquisition to boost confidence.

Elastic is the next

Disclaimer: I own a bunch of Elastic stock

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