IBM has announced its plans to acquire HashiCorp in a deal valued at $6.4 billion, aiming to expand its cloud-based software products to capitalise on the growing demand for AI-powered solutions. The deal will be closed by the end of 2024.

The acquisition of HashiCorp by IBM establishes a comprehensive end-to-end hybrid cloud platform designed to address AI-driven complexity. By combining the portfolios and talent of both the companies, clients will benefit from extensive application, infrastructure, and security lifecycle management capabilities.

HashiCorp will continue working as a division within IBM.

According to Stephen Elliot, a vice president at market research firm International Data Corp, “This is a smart deal for IBM. They’re buying a leader and it complements their existing portfolio.” Upon completion, HashiCorp is expected to drive significant synergies for IBM, particularly in strategic growth areas such as Red Hat, Watsonx, data security, IT automation, and consulting. 

IBM will make HashiCorp open again

HashiCorp boasts a diverse clientele of more than 4,400 clients, including prominent names such as Bloomberg, Comcast, Deutsche Bank, GitHub, JPMorgan Chase, Starbucks, and Vodafone. 

Arvind Krishna, IBM chairman and chief executive officer, said, “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.”

Their offerings enjoy widespread adoption within the developer community, with 85% of the Fortune 500 utilising HashiCorp’s products. In HashiCorp’s FY2024, their community products across infrastructure and security were downloaded more than 500 million times. The only problem is its change of licensing in the past few years.

Some experts predict that IBM’s open source strategy might pivot HashiCorp’s abrupt BSL licence change last year to being open source again. While others say that HashiCorp might become another cog in the IBM wheel.

One of the products of HashiCorp, Terraform, provides organisations with a unified workflow for provisioning cloud, private datacenter, and SaaS infrastructure, and enables continuous management throughout the infrastructure lifecycle. Though, it has been witnessing a decline for the last few years with people shifting to OpenTofu for its open source offerings.

Another product Vault offers identity-based security, allowing organisations to automatically authenticate and authorise access to secrets and other sensitive data. In December, it was forked into an open source project called OpenBao, interestingly by an IBM engineer.

“If I were the leader at IBM responsible for the HashiCorp deal, moving all HashiCorp products to Apache-2.0 would be the first decision I would make, and ensure that decision was highlighted in the initial press release,” said Kelsey Hightower.

In addition to these core products, HashiCorp offers:

• Boundary: A solution for secure remote access
• Consul: Facilitates service-based networking
• Nomad: Provides workload orchestration
• Packer: Used for building and managing images as code
• Waypoint: An internal developer platform

Additionally, the two companies anticipate accelerating HashiCorp’s growth initiatives by leveraging IBM’s renowned go-to-market strategy, scale, and global reach, operating in over 175 countries worldwide. 

An ideal deal for HashiCorp as well

Founded in 2012, HashiCorp believes that it is still in the early stages of cloud adoption. “With IBM, we have the opportunity to help more customers get there faster to accelerate our product innovation, and to continue to grow our practitioner community,” said Armon Dadgar, HashiCorp co-founder and CTO. 

By combining HashiCorp’s offerings with those of IBM and Red Hat, clients will have a platform to automate the deployment and orchestration of workloads across evolving infrastructure, including hyperscale cloud service providers, private clouds, and on-premises environments. 

“Our strategy at its core is about enabling companies to innovate in the cloud, while providing a consistent approach to managing cloud at scale. The need for effective management and automation is critical with the rise of multi-cloud and hybrid cloud, which is being accelerated by today’s AI revolution,” said Dadgar. 

“I’m incredibly excited by the news and to be joining IBM to accelerate HashiCorp’s mission and expand access to our products to an even broader set of developers and enterprises,” he added.