IBM just agreed to spend $34 billion on Red Hat, the largest software deal ever. It's by far IBM's biggest deal in its 107-year history and follows five straight years of declining revenue at the company.
There's no guarantee such a big bet will pay off. Spending this much won't suddenly vault IBM past Amazon in the public cloud market or turn it into a trendy software growth story like Salesforce or Twilio.
But for a company looking to stay relevant as the technology landscape rapidly evolves, buying Red Hat is a bold move, and there's logic to it.
"This is as transformative as it gets for IBM," Jeffrey Kvaal, an analyst at Nomura Instinet, wrote in a report to clients on Monday.
Here are some of the possible benefits of IBM's acquisition: