HashiCorp, an Open-Source Darling to IBM's Next Disaster?

NET(net) Founder, Owner, and Executive Chairman


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HashiCorp, a company that develops software to help customers manage infrastructure in the cloud, offers a suite of tools that automates and secures the process for building, deploying, and running applications in cloud environments. HashiCorp was known for its commitment to open-source software, however, they pivoted to a commercial focus via a Business Source License (BSL), which is still free for non-commercial use, but costs major customers who used the source code for commercial pursuits.

The BSL comes with access to the source code – but it now has restrictions on competing products and limitations on commercial use. Some of HashiCorp’s largest customers were building on top of their ‘free and open’ source code, creating a situation where customers who were benefiting from access to HashiCorp’s code may now face additional costs and/or limitations.

The shift to a commercial approach is viewed by some customers as a betrayal of trust; and a reneging on a previous commitment to open-source principles. This is especially true for the customers that used the code commercially as a building block for their own commercial products. In addition, the announcement of the change came just days before it took effect, adding to the frustration and leaving customers feeling blindsided and facing unanticipated new costs and unexpected new restrictions.

See for reference our previous blog post on this topic here:


To add further insult to customers stinging from this injury, IBM, an organization with a track record of not fully protecting open-source projects, one that is very comfortable enforcing draconian licensing provisions at the extreme expense of its customers, and one with a terrible culture killing acquisition history of bilking value while stifling innovation, is now acquiring HashiCorp, leaving customers exasperated.

Here at NET(net), we've never shied away from calling out Big Blue's anti-competitive practices. IBM's mainframe stranglehold, with its obscene 4500% markup on mainframe computing costs compared to comparable cloud workload alternatives, is a prime example.

Despite this cash cow, IBM has a demonstrably poor track record in innovation. Their "strategic growth areas" – AI, Quantum Computing, Cloud – lack any market-leading products or services.

So how does IBM "grow"? Through acquisitions, a strategy with a graveyard of once-promising companies. Remember i2, FileNet, Cognos, Sterling Commerce? All devoured by the IBM black hole, leaving customers and the market high and dry.

Now, rumors swirl of a potential acquisition of HashiCorp. Here's why this is a disaster waiting to happen.

HashiCorp's Downward Spiral: The Embrace of Darkness

We previously documented HashiCorp's concerning shift from open-source champion to a commercially licensed model.

This move reeked of a strategic pivot to become "acquisition bait" for a company like IBM, notorious for squeezing every penny out of customers through crazy audits and outlandish claims about licensing fees owed.

Apptio: A Cautionary Tale

Remember Apptio? A vibrant company recently swallowed by IBM. We predicted the disastrous consequences for Apptio's customers and the market – a prophecy tragically being fulfilled in real time.

What about RedHat?

The parallels with HashiCorp are chilling. Open-source darling turns pay-to-play, then gets acquired by a company with a history of predatory licensing practices.

IBM Acquiring HashiCorp – The industry has seen this movie before, and it had a bad ending.

In the late 90s, IBM made significant contributions to promote Linux adoption, including allocating resources in its mainframe computers to run Linux, and porting the code of major applications to work on Linux.

Instead of Linux becoming ubiquitous and free as IBM originally advocated, making it a viable alternative to proprietary operating systems, IBM pivoted to a commercial approach (big surprise), offering its own Linux distribution services instead.

In the sequel, our protagonist is now HashiCorp, whose reputation is built on open-source software. If IBM acquires them, how long with it be before they prioritize revenue production over open source development? And how do you believe that will impact the very aspect that has made HashiCorp successful?

HashiCorp is about to become part 2 of IBM’s snuff film series of open-source tools.

The Looming Threat to HashiCorp's Innovation

HashiCorp's strength lies in its agility and commitment to open-source development. Under IBM's bureaucratic wing, expect innovation to stagnate. Remember the slow, agonizing deaths of Lotus Software, Rational Software, and countless others?

The Bottom Line: A Lose-Lose for Everyone

Pssst… Hey – HashiCorp….runnnnnnn!

A HashiCorp acquisition benefits no one. Customers face the Apptio nightmare – ballooning costs and dwindling support. The open-source community loses a valuable contributor. The market loses the spark of innovation that HashiCorp embodies.

We urge HashiCorp to reconsider its path. Don't succumb to the siren song of IBM's big wallet and empty promises. The future of HashiCorp – and the health of the IT landscape – depends on it.

The IBM acquisition strategy has not changed:

“I”          Impending cultural clashes with acquired entities.

“B”        Bullying customers with blue-washed contracts and policies.

“M”       Mis-managing integration to focus on short-term profits.

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About the Author

Steven C. Zolman is a leading expert in technology investment optimization and the founder, owner, and executive chairman of NET(net), Inc., the world's leading technology investment optimization firm. With over 30 years of industry experience, Mr. Zolman has helped client organizations of all sizes maximize the value of their technology investments by minimizing cost and risk and maximizing the realization of value and benefit.

About NET(net)

Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get, and keep more economic and strategic value in their technology supply chains. Over the last 20 years, NET(net) has influenced trillions of investment, captured hundreds of billions of value, and has helped clients cost and value optimize all major areas of IT Spend, including XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, and Telecommunications, among others. NET(net) has the experience you want, demonstrates the expertise that you need, and delivers the performance you demand and deserve. Contact us at info@netnetweb.com, visit us online at www.netnetweb.com, or call us at +1 (616) 546-3100 to see if we can help you capture more value in your IT investments, agreements, deployments, and relationships.

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