IBM's Confluent buy has observability, IT ops implications
IBM's $11 billion deal for another open source software company raises possibilities for its Red Hat and HashiCorp portfolios, and for some, uneasy echoes of the past.
Industry watchers see potential tie-ins with a wide range of IBM software tools resulting from its acquisition of Confluent, including products from Red Hat and HashiCorp.
IBM reached an agreement this week to acquire the Mountain View, Calif.-based company for $11 billion in cash in a deal expected to close in mid-2026. Confluent's business is primarily based on enterprise support through its Confluent Cloud platform for near-real-time data pipelines built on the open source Apache Kafka project. While the impetus for the deal is primarily enhanced data management for agentic AI systems, DataOps tools including Kafka have seen growing use among enterprise IT operations teams outside AI and data science disciplines over the last three years to feed data to advanced IT automation systems and observability tools.
Thus, IBM could also use the Confluence acquisition to enhance data management for its observability, IT automation and FinOps tools, according to IT analysts.
Torsten Volk
"Integrating the ability to move data around in real time means, for example, that Instana can now analyze live data streams from all kinds of different hybrid cloud locations and sources, centralize all OpenTelemetry streams and even add eBPF to that mix," said Torsten Volk, an analyst at Omdia. "Especially in cloud-native environments, where issues often start as seemingly innocent correlations between events, real-time analysis is key."
"The dependency graph in infragraph is compiled through basically the same telemetry data that Instana ingests," he said. "Infragraph could have a real-time dependency map with a lot more detail compared to the currently ingested batch data. And Confluent could make sure that only valuable data gets stored in the end."
IBM's Apptio FinOps tools could also take in streams of data using Kafka, said Jason Andersen, an analyst at Moor Insights & Strategy.
"Confluent brings major data scaling to IBM's other enterprise software products so there will be a benefit to using Confluent with something like Cloudability or Concert [for AIOps]," Andersen said.
Echoes of Red Hat open source worries
IBM's Red Hat has offered a supported version of Apache Kakfa called Streams for Apache Kafka, which has also been supported on its OpenShift PaaS platform. Red Hat, which has operated independently since its acquisition by IBM in 2019, will merge further into IBM early next year, IBM confirmed in published reports last month. This increased integration may lead to further product rationalization between the two companies, according to Rob Strechay, analyst at TheCube Research. Meanwhile, Red Hat Streams for Apache Kafka general availability ended on July 31, 2025, and full support for version 3.x ends on July 31, 2028, according to Red Hat documentation.
It's not an exciting acquisition … for the Apache Kafka open source community. For current Confluent users, it raises new questions on lock-in, pricing and roadmap.
Gaurav SaxenaDirector of engineering, Fortune 20 automaker
"From a feature perspective, I have never encountered an organization using [Red Hat Streams]," Strechay said. "They more than likely are using a managed version from the hyperscalers or Confluent. And many roll their own, due to the perceived and actual high cost of using Kafka in production as a managed service. As has happened in these acquisitions IBM has made, there will be rationalization, but this one is easy."
IBM's acquisition of Red Hat still has its detractors in the open source community, and sparked some trepidation for one open source Apache Kafka user.
"It really depends on how IBM treats it -- maybe they let Confluent run somewhat independently like Red Hat," said Gaurav Saxena, director of engineering for a Fortune 20 automotive company who spoke on the condition that his company not be named. "Confluent engineers account for at least 60 Apache Kafka contributions; maybe IBM will divert all of that effort into proprietary tech and starve the OSS [open source software] off -- it's not an exciting acquisition, in any case, for the Apache Kafka open source community. For current Confluent users, it raises new questions on lock-in, pricing and roadmap."
Like it or not, however, between Red Hat, HashiCorp, DataStax and now Confluent, IBM "is now probably the biggest player in open source and this builds on a 25-year history of strategic support," said Steven Dickens, CEO and principal analyst at HyperFrame Research.
While Red Hat has roots in purely open source-based software, HashiCorp has endured controversy over its open source licensing and has not been kept independent of IBM.
"The biggest [question] for me [is], do they 'blue-wash' Confluent, or run it standalone like Red Hat?" Dickens said.
Beth Pariseau, a senior news writer for Informa TechTarget, is an award-winning veteran of IT journalism covering DevOps. Have a tip? Email her or reach out @PariseauTT.
Torsten Volk
