The world of developer tools has gotten noticeably smaller in recent years. IBM acquired the Terraform maker Hashicorp. Broadcom picked up VMware. Cisco hoovered up Isovalent and Splunk. Harness picked up Split. Not to mention, Microsoft buying Github back in 2018. More recently, GitLab has been exploring a sale.

“The developer tool market is very dynamic at the moment, and we are seeing activity around vendor acquisition and new entrants to the market," says Wing To, GM of Intelligent DevOps and Security for Digital.ai.

The wave of tech shakeups continues to make headlines, but how does this consolidation impact the developers who are reliant on these tools?

Undercurrents in the market

During the first half of 2024, mergers and acquisitions in the technology sector outpaced other industries, increasing by 42% year-over-year and coming in at $327 billion globally, according to Dealogic data as reported by Reuters.

“Interest rates are high,” says Shiva Nathan, founder and CEO of application development startup Onymos. Although high interest rates typically make it harder to finance acquisitions, the software buyouts have continued. “There have been more megadeals like the one between IBM and Hashicorp,” adds Nathan.

Another factor is the slow pace of tech IPOs, forcing companies to look for alternative means of funding. In its assessment of the top trends in M&A for 2024, Gartner recommended large enterprises invest in ‘techquisitions,’ as opposed to becoming customers of small startups, a popular corporate growth strategy during uncertain times.

“This is a natural evolution of every market as it matures and evolves,” says Digital.ai's To. “Enterprises are always evaluating their vendor list and understandably looking to drive both operational and expense efficiency. Consolidation is one path towards this.”

The costs of consolidation

This consolidation has several adverse effects on customers, including increased prices, higher risk of vendor lock-in, operational disruption, and a shrinking of best-of-breed choices in the market. 

Take Broadcom’s $69 billion acquisition of VMware, which resulted in the sunsetting of certain product lines and drastic changes to its pricing model, ending perpetual licenses in favor of subscriptions. 

The latter change forced managed service providers (MSPs) to abandon ship. As Forbes reports, this has effectively resulted in slimming down VMware's vast network of MSPs and resellers from 10,000 to a select 500.

We’re still seeing the residual effects of the Broadcom takeover. “This has particularly presented a challenge for businesses that rely heavily on VMware for their data center operations,” says Kevin Kerrigan, a solutions architect at Marcum Technology. Steep price hikes and sudden licensing changes have even prompted an investigation by EU antitrust regulators and encouraged competitors to increase prices in step.

In the case of VMware and Broadcom, commentators foresee the result likely being heightened prices. For VMware customers, “the pivotal changes arriving in May 2024 could disrupt their cloud strategies and operational dynamics, possibly leading to increased costs,” says Emil Sayegh, a serial technology CEO. Consumers will probably experience increased costs whether they stay on board or seek out alternatives. “In any case, there will inevitably be a significant price to pay,” adds Kerrigan.

At the same time, consolidation likely exacerbates the number of tools and services in use. A 2024 Okta report recently found that companies operate 93 applications on average. “Whatever consolidation is happening at a high level, where one company merges with or acquires another, enterprise developers themselves are using more tools and services than ever before,” says Onymos's Nathan.

“No one vendor provides all the necessary tools for a full software development life cycle (SDLC), and those that have a fuller set of tools, such as the hyperscale cloud vendors, only support their own clouds, which creates risk,” says Digital.ai's To. “Enterprise software buyers are still looking for fit-for-purpose tools.

The positives of unification

On the other hand, some unions can lead to better developer experiences. Years into Microsoft’s acquisition of GitHub, the platform has new bells and whistles, like GitHub Actions, GitHub Codespaces, GitHub Copilot, and GitHub Models, thanks in large part to investment from its parent company, and an approach of allowing the company to largely do its own thing. 

Similarly, other acquisitions, like the continuous delivery company Harness integrating Split, could benefit consumers by helping them deploy features quicker. The addition of Split specifically benefits Harness users by adding the ability to run A/B testing for feature flag management easily within their existing software delivery pipeline. Of course, platforms that ‘automate everything away’ can get rigid, and might rub some skeptical programmers the wrong way. But on the whole, this appears to be a net positive for customers.

Some developers have joked that if you combine HashiCorp’s popular infrastructure as code tool Terraform with IBM’s own Ansible, you end up with Terrible. However, one account of developers at Sanoma Media Netherlands describes successfully using Terraform to provision cloud infrastructure, and Ansible to configure servers in parallel. “Terraform and Ansible already sync together well. It’s a natural pairing,” writes Steven J. Vaughan-Nichols for The Register. Some tech consolidation, even the seemingly “Terrible” ones, can produce complementary effects.

Then there is Cisco’s acquisition of Isovalent, a core contributor to popular open-source projects Cillium and eBPF, the former of which is somewhat protected as a graduated CNCF project. Cisco has also assured developers that both projects will remain open-source, meaning seismic shifts are unlikely, for now.

There is also an argument to be made that since enterprise software developers are juggling countless tools, consolidation can help make sense of the chaos. This is exactly what we are witnessing in the platform engineering space, as internal developer platforms are emerging to wire together all of the infrastructure and DevOps-related tools developers are expected to juggle.

“We see another type of consolidation in the movement around platform engineering that brings together fit-for-purpose tools and simplifies the user experience and access,” says To. “It addresses the reality of needing multiple vendors, as no one vendor has a full set of tools, and still enables vendor rationalization as needed and the ability to swap tools when appropriate.”

The impact on developers

Consolidation in the tech market could bring simplicity around areas like configuration for cloud environments, with platforms acting as integration points for various fit-for-purpose tools, or improving the user experience with helpful add-on capabilities.

Yet, overall, tech acquisitions are typically met with skepticism by developers, who are left to question which favorite tool or workflow is on the chopping block today. 

For instance, AWS is currently in the midst of sunsetting a slew of non-core products. Sudden moves like this force the developers, operators, and security engineers who depend on specific software into a corner. Stability issues also discourage experimentation around new, peripheral products. “The perceived near-term cost efficiencies of consolidating vendors also exposes enterprises to vendor lock-in,” says To.

“Enterprises consolidating tools just on the basis of vendor consolidation runs counter to market trends for developers,” says To. He notes that developers are high-cost resources for enterprises, which are actively trying to provide them with more flexible options to meet their needs. In a way, consolidation flies in the face of that since it promotes one way of doing something, counter to a more flexible, best-of-breed approach.

Just look at the thousands of generative AI tools and LLMs, the unbundling of API management, the distributed web3 movement, and other areas to see that decentralization is in. So, while consolidation may seem necessary for short-term economics, in time, bulky platforms that don’t move the dial will probably be viewed as clunky, legacy deadweight.