The last 36 hours have been very exciting for Hashicorp. Yesterday, I joined Hashicorp CEO Dave McJannett, the leadership team, employees and customers for the ringing of the Nasdaq opening bell at the Nasdaq Marketsite in Times Square, New York. Following the bell ringing, Hashicorp unveiled their new Infrastructure Cloud offering. Not 24 hours later, there is news that IBM is a potential suitor to snap up Hashicorp. Let’s do a quick unpack of each of these.
The Infrastructure Cloud
Hashicorp has had good success for many years with their cloud infrastructure and security products starting with Terraform.
While Hashicorp has had success with their product offerings, and an impressive list of logos, the footprint of their deployments is surprisingly small compared with where one might think. In addition, customers use various combinations of Hashicorp products independently versus as a system.
Since the acquisition of VMware by Broadcom, there have been questions if Hashicorp’s Terraform could be parlayed into a way for enterprises to move away from VMware. Those conversations have only increased in fervor since the close of the acquisition and significant increases in license costs.
Traditionally, the Hashicorp sale is a technical one that happens further into the IT organization. It takes time to understand the value, match again the use-case, run the evaluation, and deploy the product. Unfortunately, the use-case is often for a specific purpose and not typically used as a strategic platform across the technology estate. There are several customers who have deployed Hashicorp’s solutions more broadly such as The Hartford, Goldman Sachs, Roblox and Nasdaq. However, that is more the exception than the norm.
The Infrastructure Cloud is intended to change all that. Infrastructure cloud is part reference architecture and part streamlined process. While the process still needs to be exercised, the intent is to streamline the process in order to adopt and deploy Hashicorp solutions more quickly. This further reduces the sales cycle, decreases time to value and provides a framework to integrate the various products.
It also means it is a bigger sale, requires a different IT persona to be engaged, different marketing and messaging, different partners, and ecosystem along with a few other questions to be answered. In a phrase, it is an interesting move, but we will see how it plays out.
Is Hashicorp for sale?
Not 24 hours after the Hashicorp event here in NYC, and just a few blocks away, the Wall Street Journal posts a story claiming that Hashicorp is considering a $4.9 billion sale to IBM.
I am not surprised by the news. In fact, I suggested that point a month ago in an article summarizing: “I do think that HashiCorp should look for an exit.” While their technology is solid and their customer base is strong, there is potential that is not being capitalized upon. This is a miss for customers, investors and the broader ecosystem. Note that Infrastructure Cloud is intended to move in on that potential.
Looking at IBM as a suitor would be a positive move. At a top-line, IBM provides the enterprise scale, experience, and relationships that Hashicorp is missing…and needs to build in order to grow. From a portfolio integration standpoint, Hashicorp’s products would fit nicely alongside Red Hat’s OpenShift offering and add to their IBM Cloud offering. As for open source and Hashicorp’s BDL licensing, I am more neutral on that. The dustup over their licensing changes was just that and overplayed.
My reservation would be if IBM moves away from Hashicorp’s neutral stance in working with multiple cloud providers and focuses on IBM Cloud. I suspect that would not be the case as IBM has recently shown how they are more open with other cloud providers. In fact, this is reality for enterprises today as almost all use more than one public cloud provider as part of their portfolio.
Of course this is all hypothetical. More to come on a potential sale and integration.
For now, Infrastructure Cloud is the new thing and not hypothetical.
UPDATE (4/24/2024): IBM has issued a press release with their intent to acquire Hashicorp for $6.4 billion or $35 per share.
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