① IBM plans to acquire data infrastructure company Confluent for a premium of $11 billion to strengthen its advantage in the cloud business; ② Confluent is currently valued at approximately $8.1 billion, due to artificial intelligence... The industry is experiencing a surge in business; ③ IBM's CEO previously warned against building their own data centers. The cost is high, and the return on investment is not cost-effective.
According to multiple media reports, software technology company IBM is seeking to acquire data infrastructure company Confluent, with the deal expected to be announced as early as Monday in the United States.
Confluent is currently valued at $8.1 billion, but IBM plans to acquire the company for a premium of $11 billion, highlighting IBM's strong commitment to transforming its business around artificial intelligence . If the acquisition goes through, it will be IBM's most important deal in the near future, but the possibility of the deal falling through cannot be ruled out.
Last year, IBM further strengthened its position in cloud computing by acquiring cloud software provider HashiCorp for $6.4 billion. And its strategic moves in the field of artificial intelligence . A successful acquisition of Confluent would further expand IBM's advantages in data management and technology, significantly enhancing its competitiveness.
Confluent, on the other hand, has experienced a surge in business due to the growth of the artificial intelligence industry. The company provides a fully managed cloud service called Confluent Cloud, which can be accessed on Amazon. AWS, Microsoft It is available on Azure and Google Cloud, meeting the needs of companies in various industries such as retail, technology, and finance.
What constitutes a cost-effective cloud service deployment?In October, Confluent was reported to be seeking a sale and had attracted several buyers. This market attention highlights the popularity of data infrastructure companies, driven by a race among enterprises to develop generative artificial intelligence.
On the other hand, IBM CEO Arvind Krishna warned last week that given the current high cost of infrastructure, tech giants' capital expenditures on data centers are "absolutely unlikely" to yield a return.
It points out that building a 1-gigawatt data center currently requires an investment of approximately $80 billion. If the company's target is 20 to 30 gigawatts, that would equate to $1.5 trillion in capital expenditure. In addition, tech companies also need to consider the AI chips within the data center. Due to depreciation, these AI chips will need to be replaced after five years, which will be another significant cost.
This statement may be laying the groundwork for IBM's cloud services, as purchasing cloud services could be more cost-effective for some technology companies than building and operating their own data centers. For IBM, expanding its customer base could reduce unit costs.
IBM reported its latest quarterly earnings in October, revealing slowing growth in its core cloud software business, raising concerns among investors about the company's ability to maintain its growth momentum. Analysts say IBM needs stronger software performance to sustain its overall growth.
(Article source: CLS)
