What will happen to Hashicorp?

IBM's recent acquisition of HashiCorp for $6.4 billion is a strategic move to enhance its capabilities in the hybrid cloud and multi-cloud automation sectors. This acquisition is significant because HashiCorp is well-regarded for its innovative tools that are widely adopted across the industry, used by 85% of the Fortune 500 companies (IBM Newsroom).

To give you a summary from my perspective (and this is strictly my interpretation):

IBM has struggled to compete with major cloud providers like AWS, GCP, Azure, and even Oracle. They have their own cloud, the IBM Cloud, but it hasn't been successful against these giants. Upon analyzing the financials, I noted that IBM's revenue started to decline around 2011, which coincides with the boom in cloud services. Around this time, AWS was excelling, and Azure was developing its own platform, officially launching in 2013.

IBM's primary market was originally legacy systems, which were becoming obsolete as they transitioned from hardware to software-focused solutions like storage and databases. Despite attempts to innovate, including the creation of a Managed Services Provider (MSP) division in 2018, their financial decline continued.

If IBM remains static, it might not survive beyond the next decade or so. The big four—AWS, GCP, Azure, and to some extent Oracle—dominate over 87% of cloud workloads. This doesn't leave much room for IBM to compete, hence their strategic acquisition of HashiCorp.This is consistent with IBM's earlier acquisitions, such as Red Hat in 2018, which further emphasize its commitment to a hybrid cloud approach (TechCrunch).

HashiCorp, primarily a services company, aligns well with IBM's revenue model from managed services. This acquisition could bolster IBM's position by integrating HashiCorp's capabilities across IBM's customer base, enhancing their service offerings and extending their market reach. IBM expects the acquisition to be financially beneficial, projecting an increase in growth and operational efficiencies that should result in significant margin expansion in the near future (IBM Newsroom).

Regarding the community impact, there's concern that IBM might negatively influence HashiCorp’s contributions to open-source projects, as seen with their past acquisitions. However, there’s a possibility that they might take a different approach this time by promoting HashiCorp’s products like Terraform back into the open-source community, though I'm skeptical.

Lastly, it's worth noting that IBM's strategic moves in this space, like their recent interest in acquiring companies like Crossplane, Spacelift, and Env0, indicate their intention to dominate the CI/CD space despite its competitiveness. This is just an assumption, but it shows IBM's direction in enhancing their technology stack.

On the other hand, OpenTofu’s first version is released.

Comprehensive Understanding of HashiCorp's Licensing Change

Overview of HashiCorp Licensing Change

HashiCorp announced a significant change in its licensing model, shifting from the Mozilla Public License (MPL) v2.0 to the Business Source License (BSL) v1.1. This change applies to future versions of HashiCorp's major products, such as Terraform. The MPL will continue to apply to some of their APIs, SDKs, and libraries, while future Terraform binaries and other products will be covered by the BSL.

Key Points of the Licensing Change

• Previous License: HashiCorp products were previously released under the Mozilla Public License v2.0 (MPL 2.0), which is a permissive open-source license that allows users to freely use, modify, and distribute the software.
• Current License: With the move to Business Source License (BSL), HashiCorp products can still be freely used but with some restrictions on competition. The BSL will shift to an open-source license after four years, maintaining a delayed open-source release.
• Products Affected: The main product affected by this change is Terraform, along with other HashiCorp products. Future versions starting from Terraform 1.6.0 will be under the BSL.

Purpose Behind the Change

HashiCorp’s shift to BSL is largely driven by competition concerns. Competitors like Spacelift and Env0 have built products using Terraform’s open-source tooling, potentially threatening HashiCorp's business models. The new BSL aims to prevent competitors from using HashiCorp products in their solutions while still allowing individual users and other non-competing businesses to continue leveraging their products.

Key Products and Versions Affected

• Current Stable Versions: The last versions under MPL are Terraform v1.6.0-alpha20230802 and v1.5.5.
• Future Versions: All new versions of Terraform and other affected HashiCorp products will be released under BSL.

How the License Change Works

• What the BSL Allows: The Business Source License permits users to use, modify, and distribute the software freely as long as they are not directly competing with HashiCorp.
• Time-limited Open Source: After four years, the BSL will automatically revert to an open-source license. This delayed release is intended to allow HashiCorp to protect its business interests while still contributing to the open-source ecosystem over time.
• Terraform Providers: Terraform providers will continue to be licensed under MPL 2.0, which means cloud providers and other external libraries will still operate as open-source tools.

Impacts and Concerns for Users

1. No Immediate Impact for Existing Users: The new license is not retroactive, so users can continue using the versions of Terraform and other HashiCorp products released under MPL without concern.
2. Competition: HashiCorp is likely aiming to protect its own cloud services, particularly Terraform Cloud, from being used by competitors to build solutions like Env0, Spacelift, and Scalr, which operate in the same space.
3. Compliance: Companies using HashiCorp products need to ensure compliance with the BSL when using future versions of Terraform or other products, particularly if they are in competition with HashiCorp.

Potential Solutions and Strategies for Impacted Organizations

• Bypass New License: Organizations can continue using the last stable versions of Terraform under MPL. They can also allow their customers to upload their own binaries, effectively enabling a “bring your own license” (BYOL) approach.
• Forking Terraform: Some companies in the community are exploring the option of forking Terraform and maintaining an open-source version under a non-restrictive license. For example, OpenTF is a prominent initiative working on this fork.
• HashiCorp Competitors’ Response: Many competitors like Pulumi, Spacelift, Env0, and Scalr have issued statements affirming that they are unaffected or taking steps to ensure their continued operation. The OpenTF movement is gaining traction as an alternative to HashiCorp’s Terraform.

Industry Monitoring and OpenTF Initiative

A significant response from the open-source community to HashiCorp’s licensing change is the creation of OpenTF, a movement aimed at forking Terraform and maintaining an open, community-driven alternative. This initiative is backed by multiple YC companies and has gained momentum across the DevOps space. Several competitors and ecosystem participants have voiced support for OpenTF.

Other companies in the industry, such as Pulumi, Atlantis, Scalr, and Spacelift, have also issued statements clarifying their positions and actions in light of HashiCorp's decision.

Useful Links and References

1. HashiCorp’s License FAQ
2. OpenTF Initiative
3. HashiCorp’s Business Source License