Google Inc., the world`s largest provider of enterprise cloud computing, is set to take over Red Hat (pictured), a leading player in open-source software (SW) If Google takes over Red Hat, it will become the clear third place in the cloud market after Amazon Web Services (AWS) and Microsoft (MS).

According to Bloomberg and Wall Street and Google, Red Hat is one of the most likely candidates for acquiring M & A for the purpose of enhancing cloud competitiveness.

Daiean Green, Google Cloud Computing business general manager, said in an interview with foreign news company, "We are preparing for a large M & A for competition with Amazon and Microsoft and are looking for candidates."

Meanwhile, Google is a latecomer in the enterprise cloud market. Although we have been involved in the startup and have a close relationship with Cisco, we need to have a clear path to change our existing market landscape. The acquisition of Red Hat is expected to cost about USD 30 billion (KRW 32.37 trillion) based on the current share price. This is the top 10 US IT company M & A since 1995, Dell`s acquisition of EMC, which was worth USD 64 billion (USD 70 billion) in 2015.

An industry expert said, "Google`s holding company, Alphabet, has lost its second place in the Amazon market this month, so we have to defeat our pride." Amazon`s growth is due to its cloud business, which accounts for half of its operating profit. "It is time to have a solid footing to catch up."

◇ Red Hat`s appeal is `Linux` and `Hybrid Cloud` = Some analysts say Amazon, Microsoft and IBM will not be watching if Google tries to acquire Red Hat. Amazon, Microsoft and IBM are working closely with Red Hat to build a hybrid cloud platform (public and private cloud systems).

Especially, Red Hat accounts for about 70 % of the Linux market, the most widely used operating system in the data center. The company also has a cloud platform based on container virtualization, middleware solutions, open stack and open shifts, and is building its influence in the enterprise IT market. In January, it acquired the core OS of container solution company. It is an analysis that it is an attractive target for global IT dinosaurs, as it has not only been superior in terms of technology, but also has continued to grow for 60 consecutive quarters.

If Google takes over Red Hat, it is expected to rush to this year. Red Hat`s market capitalization has nearly doubled from a year earlier, and rumors are expected to rise going forward. Goldman Sachs specialist Jim Cramer has named Red Hat as "Cloud King" on CNBC and named it the best recommendation week.

Amazon and Microsoft each rank firmly in the first and second places, while Google, IBM and Alibaba are hitting the spot for third place in the cloud market in the case of global cloud market. Market researchers have different standards for each, but recently it is the industry that recognizes Google as Big 3 with Amazon and Microsoft.

If Google succeeds in acquiring Red Hat, it will be the number three in the industry as well as the base for Microsoft. However, considering the corporate culture of Google and Red Hat`s brand, symbolism, and market influence, it is likely to operate independently. When Intel acquired Wind River, a real-time embedded OS (RTOS) company, or when EMC bought VMware, a virtualization solution company, it managed its independence.

"As Red Hat is a leader in open source software, it will have a higher value in the marketplace when it remains independent," said an industry source familiar with Red Hat. "Major shareholders also understand this, Even if the premium is not high, it is necessary to watch whether the acquisition will take place."


By Lee Gyung Tak kt87@


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