IBM Acquires HashiCorp for $6 Billion

IBM Acquires HashiCorp for $6 Billion

Over the past few years, we have seen a battle royale being played out between Amazon, Microsoft and Google in the cloud infrastructure space, which could be valued at over $1.26 trillion by 2028. IBM, which had the heft to join the fray, smartly stayed away and focused itself around helping enterprise IT by supporting complex hybrid environments. 

What’s more, IBM used its financial muscle to grow inorganically over the six years, even as its big-tech rivals cornered two-thirds of the cloud infrastructure space. The latest announcement that IBM would be acquiring cloud management vendor HashiCorp for $6.4 billion, was on expected lines if one had kept a close watch. 

Six years ago, IBM splurged $34 billion to acquire Red Hat and last year they followed it up by buying out Apptio by paying $4.6 billion in cash. With HashiCorp, the company now boasts of a set of cloud lifecycle management and security tools. Small wonder that IBM CEO Arvind Krishna is pleased as punch as the acquisition sits well with his hybrid strategy. 

“HashiCorp has a proven track record of enabling clients to manage the complexity of today’s infrastructure and application sprawl. Combining IBM’s portfolio and expertise with HashiCorp’s capabilities and talent will create a comprehensive hybrid cloud platform designed for the AI era,” he said in a statement.

When it acquired Apptio and closed all formalities last year, IBM was hoping to enhance its services and systems integrations business – more specifically provide customers with a more robust set of tools to set up and manage the hybrid cloud infrastructure that more and more businesses are shifting towards these days. 

Now, with this latest $6.4 billion acquisition, IBM hopes to provide solutions to enterprise IT customers in their cloud lifecycle management besides also getting its hands on a company that has shown robust growth rates. Of course, HashiCorp revenues of $155 million over the last quarter might be peanuts for IBM, but then it helps the company add to its growing set of offerings in the hybrid cloud segment. 

Just so readers know, HashiCorp hit the headlines after it changed the license of its open source Terraform tool to make it more friendly. Those that helped build it weren’t a happy lot and came up with a new open source alternative called OpenTofu. This made HashiCorp see red and accused them of misusing its open source code. With IBM now stepping in now, would this battle rage on or will the big tech just ignore small tech?

Some analysts point out that IBM seems to be netting companies that are connected at the umbilical cord levels. Even Red Hat changed its open source licensing norms and created a ruckus amongst the open source community. Looks like IBM is hell bent on closing the loop and the cloud when it comes to delivering lifecycle management solutions. 

Of course, how IBM would structure the takeover and whether it would be on the lines of how Red Hat operates as a separate entity within the IBM family remains to be seen. Analysts believe that keeping HashCorp on similar lines could make sense for IBM as it would then allow the former to continue to work with multiple cloud providers. By limiting them to work on IBM Cloud, the company might just miss out on big opportunities, they say. 

HashiCorp, headquartered in San Francisco, was founded in 2012 by two classmates from the University of Washington – Mitchell Hashimoto and Armon Dadgar. Cofounder Hashimoto worked on open-source software called Vagrant, which was later incorporated into the new company. It had raised close to $350 million before going public in 2021. 



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