Apr 07, 2020 (IAM Newswire via COMTEX) -- It all started when International Business Machines Corporation /zigman2/quotes/203856914/composite IBM -0.80% joined forces with the open-source software giant Red Hat. The deal was closed in July 2019, after IBM acquired Red Hat for $34 billion. This deal, one of IBM's biggest acquisitions ever, aimed to help the company increase its market share in the cloud infrastructure business, which has been stated as one of the company's four key growth segments, besides social, mobile and analytics. And the target is quite high - to reduce the gap between IBM and cloud industry leaders like Amazon.com, Inc. /zigman2/quotes/210331248/composite AMZN -0.39% and Microsoft Corporation /zigman2/quotes/207732364/composite MSFT -0.23% . IBM needed this after three consecutive quarters of declining revenues (year-to-year comparison). And the advisors working on both sides approved the deal. The Goldman Sachs Group, Inc. /zigman2/quotes/209237603/composite GS -4.03% , JPMorgan Chase & Co. /zigman2/quotes/205971034/composite JPM -1.49% and Lazard Ltd /zigman2/quotes/207289775/composite LAZ -2.95% consulted IBM, while Morgan Stanley /zigman2/quotes/209104354/composite MS -5.25% and Guggenheim Strategic Opportunities Fund /zigman2/quotes/203173661/composite GOF +0.13% did the same for Red Hat.
Changes in IBM after the Red Hat deal
Once Red Hat became the "unit" of IBM's hybrid cloud division, but as an independent company with its own executive organization, there had to be some changes among the executives. Ginni Rometty, IBM's CEO who led the company since 2012 stepped down, but she will stay in IBM in the role of executive chairman of the Board until the end of 2020 when she plans to retire after spending almost 40 years in the company. For her successor, the company chose Arvind Krishna (known by his first name), who has been with the company since 1990. Arvind's previous position as IBM's senior vice president for cloud and cognitive software is just another proof of the company’s strategy in the cloud segment. He was the one responsible for IBM's acquisition of Red Hat for $34 billion.
Red Hat must continue with good results in the cloud business
Another proof of how important the Red Hat deal is to IBM can be seen in the fact that Red Hat's CEO Jim Whitehurst, who joined IBM's senior management team to report to CEO Ginni Rometty, before she stepped down, was named IBM’s president in late-January. His previous position in Red Hat was filled by Paul Cormier, which is more than a logical choice, since Cormier was with the company since 2001, and helped the company grow to a multi-billion-dollar value.
Collaboration with the banking sector
After Arvind moved up to IBM's CEO position, he left the position of head of IBM's cloud business open. The company decided to hire Howard Boville for that position, who was chief technology officer in Bank of America Corporation /zigman2/quotes/200894270/composite BAC -4.31% . This is not a strange decision since Boville was leading the team which built and ran the second-largest U.S. bank's cloud solution. IBM has previously collaborated with Bank of America on the creation of a financial services-specific cloud solution.
The cloud battle is just heating up
Of course, the competition is not standing still. One of the two cloud market leaders, Microsoft, knows it must constantly work on new solutions and ideas to keep its current position and maybe increase market share. To do so, Microsoft announced its decision to acquire a company Affirmed Networks and its cloud-native, virtualized mobile network solutions. This way, Microsoft will be able to upgrade its work with the telecommunications industry and build a more secured and trusted cloud platform. This will be a new tailor-made solution for the operators, which will help them to better manage their network workloads in the cloud segment.
So, IBM is working on its own cloud and infrastructure solutions, Microsoft is moving further in the cloud infrastructure world and who knows where this will take us, but surely we can expect many exciting cloud news in the tech market!
This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: firstname.lastname@example.org Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: email@example.com Questions about this release can be send to firstname.lastname@example.org
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