5 Companies Owned by IBM

International Business Machines Corp. (IBM) is a multinational technology company that offers a range of computing solutions and technology consulting services. Big Blue traces its origins back as early as the 1880s, but it was in 1911 that the company was first incorporated as the Computing-Tabulating-Recording Co. (C-T-R) in the state of New York.

C-T-R manufactured and sold machinery, including commercial scales, industrial time recorders, meat and cheese slicers, and tabulators. The company formally changed its name in 1924 and has since grown into a major global corporation focused on software, technology and business consulting, and cloud computing.

IBM generated net income of $7.5 billion on revenue of $61.9 billion in 2023. It has a market capitalization of $166.9 billion as of April 2024. It currently operates through four business segments: Software, Consulting, Infrastructure, and Financing.

For most of the early computer era, IBM focused on the manufacture of machinery and computer hardware products. But beginning around the 1990s, the company began to shift its focus toward computer services and software. It sold off hardware businesses such as flat-panel displays, disk drives, and personal computers, and began acquiring services and software companies.

In recent years, the company has set its sights on becoming a leader in cloud computing, a strategic push underscored by its 2019 acquisition of Red Hat Inc. To facilitate this shift toward cloud services and artificial intelligence (AI), IBM spun off its infrastructure management business in 2021. The new company is called Kyndryl, and the spin-off was completed in November 2021.

Below, we take a closer look at some of IBM’s more recent acquisitions, and what they are expected to bring to the business.

(The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes, except for quarterly revenue for Red Hat.)

Red Hat Inc.

• Type of business: Open source software
• Acquisition price: Approximately $34 billion
• Acquisition date: July 9, 2019

Red Hat was founded in 1993 by Marc Ewing, or, as he was known by many in the computer lab during college, “the guy in the red hat.”

Ewing had created and was distributing his own version of Linux® on CDs. He later joined forces with small businessman Bob Young, and the two launched Red Hat Software in 1995 with Young as CEO.

The open-source development model on which the company was built was aimed at challenging what its founders saw as the monopolistic tendencies of the technology industry.

The company went public in 1999 with a record-breaking initial public offering (IPO).

In 2019, Red Hat was acquired by IBM for approximately $34 billion, which broke the record for the largest software acquisition in history. The acquisition brings together Red Hat’s open hybrid cloud technologies with the scale and depth of IBM’s innovation, industry expertise, and sales leadership.

The goal for IBM has been to work with Red Hat in offering a next-generation hybrid multi-cloud platform for its enterprise clients, especially as some of IBM’s legacy businesses are shrinking.

Cognos Inc.

• Type of business: Business intelligence and performance management software
• Acquisition price: $4.9 billion
• Acquisition date: Jan. 31, 2008

Cognos was founded in Ottawa, Canada, in 1969 by Alan Rushforth and Peter Glenister. The firm specialised in developing software for business intelligence and performance management. In 2005, Cognos launched its award-winning Cognos 8 BI product, which could be used for creating professional reports, data analysis and monitoring, model creation, and more.

The company was acquired by IBM in 2008 for $4.9 billion. At the time, IBM’s intention in acquiring Cognos was to accelerate its cross-company Information on Demand strategy, unlocking the business value of information through information integration, content and data management, and business consulting services. The combination would help companies increase the value of their information, optimize business processes, and maximize performance.

SoftLayer Technologies Inc.

• Type of business: Cloud computing infrastructure
• Acquisition price: Financial terms undisclosed but estimated at $2 billion
• Acquisition date: July 8, 2013

SoftLayer Technologies was founded in 2005 as a hosting services and cloud computing provider. By the time SoftLayer was acquired by IBM in 2013, it had about 21,000 customers and was operating 13 data centers in the United States, Europe, and Asia.

Following the acquisition, SoftLayer became part of IBM’s cloud services division. The aim was to create a global cloud platform that would make it easier for companies and organizations to adopt the latest cloud services.

It was another example of IBM’s push to accelerate the growth of its cloud computing business after it began making more than a dozen cloud-related acquisitions in 2007. SoftLayer, now called IBM Cloud, currently has more than 60 data centers in 18 zones.

PricewaterhouseCoopers (PwC) Consulting

• Type of business: Global management consulting and technology services
• Acquisition price: Approximately $3.5 billion
• Acquisition date: Oct. 2, 2002

PricewaterhouseCoopers, a global network of firms offering assurance, tax, and consulting services, was created out of a 1998 merger between Price Waterhouse and Coopers & Lybrand. In 2002, the company sold its consulting services business—PwC Consulting—to IBM for approximately $3.5 billion.

IBM integrated the consulting service into a new global business unit called IBM Business Consulting Services, extending the reach of its Global Services Business. At the time, it was the largest consulting services organization in the world, having operations in more than 160 countries.

The acquisition allowed IBM to combine business consulting with technology solutions, which many of its clients were demanding at the time.

Truven Health Analytics

• Type of business: Cloud-based healthcare data, analytics, and insights
• Acquisition price: $2.6 billion
• Acquisition date: April 8, 2016

IBM's acquisition of healthcare data and analytics services company Truven Health Analytics proved to be short-lived. It folded its new acquisition into its Watson Health business. Then, in 2022, it sold the entire Watson Health business to Francisco Partners, an investment company.

Analysts said that Watson Health had failed to match IBM's ambitions to build a healthcare AI business. Watson Health has been renamed Merative.

The price for Watson Health was not disclosed but was estimated at "more than $1 billion,"

Turbonomic

• Type of business: Artificial intelligence and information technology management
• Acquisition price: Reportedly over $1.5 billion
• Acquisition date: June 17, 2021

Turbonomic was founded in 2009 to develop AI software to manage information technology (IT) systems. The company provided an analytics engine to oversee resourcing decisions and facilitate communication among systems. The company grew to serve thousands of customers, including a third of Fortune 500 companies.

IBM announced its acquisition of Turbonomic in June 2021 as part of its new focus on cloud services and AI. This acquisition comes amid a flurry of deals around other cloud and AI companies, including Nordcloud and Instana.

The Bottom Line

IBM proved it could be nimble when it moved from cheese slicers to punch cards. Once known primarily as a computer hardware maker, it has in recent years reinvented itself once again to focus on technology and business services, consulting services, cloud computing, and artificial intelligence.