Did IBM make a $6.4 billion blunder by buying HashiCorp?
- Reference: 1715337011
- News link: https://www.theregister.co.uk/2024/05/10/opinion_column_ibm_hashicorp/
- Source link:
Seriously, though, Terraform and Ansible already sync together well. It's a natural pairing.
IBM to acquire Hashi for $6.4B, hopes it will boost software biz and Red Hat [1]READ MORE
The business case is also clear. According to the business-to-business market analysis company 6Sense, [2]Terraform has a 32.02 percent market share in the configuration-management category. Number two? Ansible, with 31.35 percent.
As IBM CFO Jim Kavanaugh said in IBM's last [3]earnings call , "The powerful combination of Red Hat's Ansible Automation Platform's configuration management and Terraform's automation will simplify provisioning and configuration of applications across hybrid cloud environments."
I can also easily see other HashiCorp programs, such as its secrets manager Vault, the portable virtual software development platform creator Vagrant, and the machine image builder Packer, being incorporated into the Red Hat line. All good news, right? Wrong.
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There's only one little, itty-bitty problem: HashiCorp abandoned its open source roots for all these programs. After [5]HashiCorp dumped its use of the Mozilla Public License (MPL) for the semi-proprietary Business Source License (BSL) 1.1 for its once open source programs, some of their developers abandoned ship and launched open-source forks.
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The most important of these is [8]OpenTofu, the fork of HashiCorp's flagship program, Terraform . Despite HashiCorp's efforts to torpedo the fork, [9]OpenTofu, with the backing of the Linux Foundation , has taken off with both developers and customers.
Its first release, [10]OpenTofu 1.7, comes with end-to-end encryption and numerous other valuable features. That's in no small part because many top Terraform developers moved to the fork. If you want the newest and best IaC tool, you probably want OpenTofu.
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OpenTofu, I might add, isn't the only HashiCorp open-source fork getting traction. [12]Vault's open-source twin OpenBao , opened its doors last December.
So, tell me again, exactly what IBM is getting for its billions? The technology's open. Why pay for it when it's only a free download away?
Terraform's business savvy? Please. The BSL move ticked off developers and customers alike. After its BSL switch, HashiCorp's stock hit a record low of $21.11, down 22 percent after its October 2023 earnings call.
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Still, HashiCorp really wanted to get bought, and from that viewpoint, its recent business moves have been a success. Its executives and stockholders must be laughing all the way to the bank. For IBM? Well, that's another story.
Immediately after IBM confirmed its plans to acquire HashiCorp and reported lowered-than-expected quarterly earnings, [14]IBM shares dropped over 8 percent in extended trading . As I write this, IBM's stock has continued to hover at about that same price.
[15]Linux Foundation is leading fight against fauxpen source
[16]Are you ready to back up your AI chatbot's promises? You'd better be
[17]Bricking it: Do you actually own anything digital?
[18]Do we really need another non-open source available license?
In short, the market thinks this was a bad deal.
So, what happens next? Good question. If all goes well with the contract, and I see no reason why it wouldn't, the deal will be closed in 2024's fourth quarter.
But, there's more to this than just another business deal. OpenTofu co-maintainer Sebastian Stadil told The New Stack, "A lot of [OpenTofu] folks were puzzled about what exactly IBM intends to do, beyond all of the marketing speak. We're [19]hopeful that IBM understands open source better than HashiCorp does ."
Stadil also said IBM and OpenTofu have been talking since the deal was announced. So, does that mean the HashiCorp programs will return to their original licenses? We don't know.
I hope they do. As Stadil said, "Nobody likes split communities. Nobody likes fragmentation of efforts. So we would welcome [an open-source] Terraform." Many developers would, and I would, too.
If things stay as they have been with the relicensed programs, IBM's reputation as an open source supporter, already damaged by [20]Red Hat's recent Red Hat Enterprise Linux (RHEL) source code restrictions , will suffer even more. And, that will be rotten news for both IBM and open source. ®
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[1] https://www.theregister.com/2024/04/25/ibm_q1_2024/
[2] https://6sense.com/tech/configuration-management/terraform-market-share
[3] https://newsroom.ibm.com/2024-04-24-IBM-to-Acquire-HashiCorp-Inc-Creating-a-Comprehensive-End-to-End-Hybrid-Cloud-Platform
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/devops&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Zj5EoI6HzKoFdNEa13GfVQAAAJQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://www.theregister.com/2023/08/11/hashicorp_bsl_licence/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/devops&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zj5EoI6HzKoFdNEa13GfVQAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/devops&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zj5EoI6HzKoFdNEa13GfVQAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2023/09/20/terraform_fork_opentf_opentofu/
[9] https://www.theregister.com/2024/04/12/linux_foundation_opinion/
[10] https://devops.com/what-opentofu-1-7-means-for-devsecops/
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/devops&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zj5EoI6HzKoFdNEa13GfVQAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://www.theregister.com/2023/12/08/hashicorp_openbao_fork/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/devops&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zj5EoI6HzKoFdNEa13GfVQAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://www.investopedia.com/ibm-stock-drops-after-confirming-hashicorp-acquisition-and-posting-q1-revenue-miss-8638689
[15] https://www.theregister.com/2024/04/12/linux_foundation_opinion/
[16] https://www.theregister.com/2024/02/23/opinion_column/
[17] https://www.theregister.com/2023/12/22/opinion_column/
[18] https://www.theregister.com/2023/11/24/opinion_column/
[19] https://thenewstack.io/opentofu-amiable-to-a-terraform-reconciliation/
[20] https://www.theregister.com/2023/07/07/red_hat_open_source/
[21] https://whitepapers.theregister.com/
Re: Read carefully !!!
CentOS also used to be "free and open".
It's only $6 billion
Why strategize and waste limited brain cells trying to do something modern, like actually use Open Source ?
When you're IBM, you do things the old way. You spend lavishly on companies because their product "fits" one of yours. Integrating an open source project doesn't show up in quarterly earnings, not soon enough to make a bonus's worth. Buying a company allows you to pump your balance sheet, gives the CEO something to put on his CV and lands a few cocktail parties and bonuses for the high-level peons involved.
Just integrating open-source code means that only the programmers get to share a beer in their success. Where's the fun in that ?
Re: It's only $6 billion
I think it's a bit like Broadcom's purchase of VMWare – even if there are open source alternatives – there's an opportunity to milk the existing customers, some of whom might be secretly pleased to see the product become more commercial.
Re: It's only $6 billion
Hmmm.... While I do question the purchase, I think its unfair to compare IBM to Broadcom. Broadcom's moves with VMware are far harsher than IBM's and IBM isn't known for buying and milking like Broadcom is.
Quick - sue the HashiCorp CEO
for something or another -- ask HP for some tips on doing this.
"HashiCorp's programs are ideal fit for IBM/Red Hat's software lines, but why buy the company when the software's free and open?"
Presumably this is so that IBM can turn the open source software into closed source software to try to make $$$.
I guarantee that this will fail since a fork of the software will be made that will remain open source. Redis tried to pull that misguided stunt a few weeks ago and the only thing that happened was that the open source Valkey was created instead and will now by used by Redis' former customers.
I also recall something similar with Oracle many years back regarding Hudson, which led to the devs forking into Jenkins.
And on the same lines, with Oracle yet again, there's OpenOffice and LibreOffice.
"And on the same lines, with Oracle yet again, there's OpenOffice and LibreOffice."
That was a case of closed source being released into the open, not an open source product being acquired. Oracle inherited OpenOffice from Sun. Sun had acquired the German company Star Division —creator of StarOffice— in 1999, and released Star Office, together with its source, forming the original source code base of OpenOffice and LibreOffice.
"a fork of the software will be made"
Like the OpenToFu mentioned in TFA?
Exactly like the OpenToFu mentioned in TFA.
Not sure IBM cares too much about the command line terraform which was the only open source bit. It always struck me as being an 'open core' project of sorts. It's HCP Terraform or the enterprise stuff they're after, none of which was ever free (unless you've less than 5 users but IBM doesn't care if that's you). True, most terraform adopters only ever ran the terraform cli tool and built their own management around it with extra bits of scripts and CI/CD platforms but in my opinion the terraform tool itself is not of much use without a management process and supporting infrastructure around it except in the most simple of cases. So from IBM's perspective I reckon the merger of ansible and terraform into a unified platform with a web front end, lots of graphs, and reports for management types will be a winner for enterprises. For everyone else there's the forks.
Success is guaranteed
Who is going to admit that they've just flushed $6.4B USD down the toilet? They'll do the obligatory review in a year, declare it a success and award themselves huge bonuses for a job well done.
how in the world terraform and ansible are good for each other? it's clear as day they are competitors, each having about a third of the market, IBM heavily invested in Ansible over the last few years after RH acquisition, and now having TF too, it's like having a split brain. They now have two tools that do exactly same thing. This is definitely a bad move for IBM and even worse for TF, since IBM will play with it and will throw it away like it does everything else.
How are either on their own good ?
Most of these tools are absolutely crap, terrible files, terrible error messages - so many are unreadable, almost no validation, mysteriously skipping files because of a missing space....
The real q is how did IBM get those billions in the first place.
Read carefully !!!
"HashiCorp's programs are ideal fit for IBM/Red Hat's software lines, but why buy the company when the software *was* free and open?"
The answer is in the 'adjusted' sub-heading !!!
:)