Microsoft to buy open source torch-bearer Github

Microsoft needs an army of developers to beat Amazon in the cloud. Is this purchase the first salvo?
5 June 2018 | 736 Shares

Redmond hitches itself to open source with acquisition of Github. Source: Github

Microsoft has announced it intends to buy software development platform Github for US$7.5 billion.

“Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovation,” Microsoft CEO Satya Nadella said in a statement.

“We recognize the community responsibility we take on with this agreement and will do our best work to empower every developer to build, innovate and solve the world’s most pressing challenges.”

Github lost its CEO some ten months ago when founder Chris Wanstrath walked away. Since then the company has been searching for a replacement, who now comes in the form of Microsoft vice president Nat Friedman.

“The future of software development is bright, and I’m thrilled to be joining forces with Microsoft to help make it a reality,” Wanstrath said.

“Their focus on developers lines up perfectly with our own, and their scale, tools and global cloud will play a huge role in making GitHub even more valuable for developers everywhere.”

Wanstrath will become a Microsoft “technical fellow,” defined by Microsoft as:

The special designation of “Technical Fellow” is an acknowledgment of the key role a technical leader plays in driving intentional innovation, in alignment with Microsoft’s business strategies, which in turn impacts the high-tech industry overall.

A Technical Fellow’s technical vision, expertise and world-class leadership is commensurate with that of a corporate vice president focused on business leadership.

These individuals are instrumental in developing and driving technical strategies for Microsoft and the technology industry.”

Github is the world’s largest software collaboration, repository, and development platform, which funds its operations by means of subscriptions to upper tiers of its services.

Microsoft itself is one of the platform’s biggest users, as are Google and Apple, among literally millions of others.

Only a few years ago, the whole concept of what Github represented was an anathema to Microsoft, whose proprietary code base was seen as being in direct competition with the open-source beacon which was (and still is) Github.

But now Microsoft itself uses open source software, notably to power some of its cloud offerings, and there are several Linux variants which run happily on and alongside Windows systems.

The collaborative platform has 23 million users across 1.5 million organizations and is thought to receive around US$200 million from its enterprise subscription use tier.

The company has yet to make a profit, despite being valued at around US$2 billion three years ago during a funding round.

Microsoft does not expect its new acquisition to turn a profit until 2020, but clearly sees the platform as pivotal in its cloud-oriented strategy:

Github will be reported financially under the Redmond giant’s Intelligent Cloud segment.

Microsoft said the merged entity would “accelerate enterprise use of GitHub and bring Microsoft’s developer tools and services to new audiences.”

In order to challenge Amazon’s continuing dominance of the cloud services market, Microsoft needs to be careful with the platform, still beloved of the open-source community.

Failure to do so would not help Microsoft’s need for development muscle powered by the community’s goodwill.

It turned off its Redmond-flavored version of a collaborative dev platform, Codeplex, last year, saying that Github made its own efforts unnecessary or redundant.

Some analysts are of the opinion that Microsoft may hope to integrate Azure tightly with Github so that developers could find their efforts gently pushed towards that platform.

Github’s board were apparently unduly worried by the prospect: they found Microsoft’s entreaties more attractive than taking the company public, which was their other option to move the company into much-needed profit.