Did IBM make a $6.4 billion mistake by buying HashiCorp? • The register

Notice In a way, the fact that IBM paid $6.4 billion for HashiCorp makes perfect sense. HashiCorp’s infrastructure as code (IaC) tool, Terraform, is very popular and would work well with Red Hat Ansible. And yes, I’ve heard the joke that if you put them together you’d get “Terrible.”

Seriously, Terraform and Ansible already sync well. It’s a natural pairing.

IBM to acquire Hashi for $6.4 billion, hopes it will boost software industry and Red Hat


The business case is also clear. According to business-to-business market analysis firm 6Sense, Terraform has a 32.02% market share in the configuration management category. Number two? Ansible, with 31.35 percent.

As IBM CFO Jim Kavanaugh said during IBM’s latest earnings conference call: “The powerful combination of Red Hat’s Ansible Automation Platform configuration management and automation of Terraform will simplify the provisioning and configuration of applications in hybrid cloud environments. »

I can also easily see other HashiCorp programs, such as its Vault secrets manager, portable virtual software development platform creator Vagrant, and machine image builder Packer, incorporated into the Red Hat lineup. That’s good news, isn’t it? Fake.

There’s just one tiny problem: HashiCorp has abandoned its open source roots for all of these programs. After HashiCorp abandoned its use of the Mozilla Public License (MPL) for the semi-proprietary Business Source License (BSL) 1.1 for its formerly open source programs, some of their developers abandoned ship and launched open source forks .

The largest of these is OpenTofu, the fork of HashiCorp’s flagship program Terraform. Despite HashiCorp’s efforts to torpedo the fork, OpenTofu, with support from the Linux Foundation, took off with developers and customers.

Its first version, OpenTofu 1.7, comes with end-to-end encryption and many other valuable features. This is largely due to the fact that many prominent Terraform developers have migrated to the fork. If you want the best and latest IaC tool, you probably want OpenTofu.

OpenTofu, I might add, is not the only open source fork of HashiCorp gaining traction. Vault’s open source twin, OpenBao, opened last December.

So, tell me again, what exactly is IBM getting for its billions? The technology is open. Why pay for it when you can only download it for free?

Terraform’s business acumen? Please. BSL’s decision has discouraged developers and customers. Following its BSL change, HashiCorp stock hit an all-time high of $21.11, down 22% following the October 2023 earnings release.

HashiCorp, however, really wanted to be acquired, and from that perspective its recent business initiatives have been a success. Its managers and shareholders must be laughing all the way to the bank. For IBM? Well, that’s another story.

Immediately after IBM confirmed plans to acquire HashiCorp and reported lower-than-expected quarterly earnings, IBM shares fell more than 8% in extended trading. As I write this, IBM shares have continued to hover around the same price.

In short, the market considers it a bad deal.

So what happens next? Good question. If everything goes well with the contract, and I see no reason why it won’t, the deal will close in the fourth quarter of 2024.

But there’s more to it than just another trade deal. Sebastian Stadil, co-maintainer of OpenTofu, told The New Stack: “A lot of people (at OpenTofu) were confused as to what exactly IBM was planning to do, beyond all the marketing talk. . We hope IBM understands open source better than HashiCorp. “

Stadil also said that IBM and OpenTofu have been in talks since the deal was announced. So, does this mean that HashiCorp programs will get their original licenses back? We do not know it.

I hope they do. As Stadil said: “No one likes divided communities. No one likes fragmented efforts. So we would welcome Terraform (open source).” Many developers would do this, and so would I.

If things remain as they have been with licensed programs, IBM’s reputation as a proponent of open source, already damaged by recent Red Hat Enterprise Linux (RHEL) source code restrictions, will will suffer even more. And that will be bad news for IBM and open source. ®