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Five Reasons Why Microsoft Acquired GitHub for $7.5 Billion

Microsoft’s Nat Friedman

GitHub’s Chris Wanstrath

Microsoft CEO Satya Nadella

The rumors were true. Microsoft has acquired GitHub, the online developer community, for $7.5 billion, the technology giant confirmed today. The deal is expected to close by the end of 2018.

The buyout is not about immediate top-line revenue growth. Instead, it’s all about capturing the hearts and minds of developers worldwide. Among the top five reasons Microsoft is acquiring GitHub.

1. Developers, Developers, Developers: More than 28 million developers worldwide use GitHub to “learn, share and collaborate to create the future.”

In the 1990s, Windows largely dominated the software development world. But when cloud, mobile and social came along, Microsoft was caught somewhat flatfooted with developers. The company regained some ground by making Azure a cross-platform cloud service that supports far more than Windows applications.

Now with GitHub, Microsoft gains a community where developers share and track code changes worldwide — potentially setting the stage for new cloud applications that run on Azure and more. And in keeping with GitHub’s culture, the platform will remain open to all sorts of software.

As Microsoft CEO Satya Nadella stated today:

“The era of the intelligent cloud and intelligent edge is upon us. Computing is becoming embedded in the world, with every part of our daily life and work and every aspect of our society and economy being transformed by digital technology.

Developers are the builders of this new era, writing the world’s code. And GitHub is their home.”

2. DevOps: As Developers and Operations work more closely within businesses, they need a way to more closely track software revisions, code updates, and more. GitHub can be that answer. Or as the new owner put it: “The platform hosts a growing network of developers in nearly every country representing more than 1.5 million companies across healthcare, manufacturing, technology, financial services, retail and more.”

3. Business Intelligence: GitHub is home to more than 85 million code repositories used by people in nearly every country, Microsoft says. Now, imagine if the technology giant applied some business intelligence to all of that activity — pinpointing exactly how software was evolving to address artificial intelligence, machine learning and more…

4. Synergies: Microsoft already uses GitHub for its own business, with more than 2 million “commits,” or updates, made to projects, the company says.

5. Coders Are Customers: Ever since Satya Nadella shifted to the CEO role, the company has intensified its engineering expertise and abandoned multiple losing strategies (i.e., Windows Mobile). Nadella realizes that the company’s best “customers” during the PC era were developers who built value atop Windows. Now, he’s applying a similar model to the “intelligent cloud and intelligent edge” era.

Side note: Under terms of the deal, Microsoft Corporate Vice President Nat Friedman, founder of Xamarin and an open source veteran, will assume the role of GitHub CEO. GitHub’s current CEO, Chris Wanstrath, will become a Microsoft technical fellow, reporting to Executive VP Scott Guthrie, to work on strategic software initiatives.

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2 Comments

Comments

    Michael Proper:

    Solid 5 reasons and amazing suffocation strategy executed by the new Microsoft CEO Satya Nadella a 180 shift from Ballmer’s “Linux is a cancer” perspective. Great to see!

    Predicted almost 2 years ago. 🙂
    https://www.clearcenter.com/blogs/timeline/2016-the-year-the-penguin-jumped-over-the-chasm

    2016 – THE YEAR THE PENGUIN JUMPED OVER THE CHASM

    As open source software continues to mature and gets adopted by more and more major corporations, it is becoming clear that both the SMB and Enterprise software game has changed and the innovation adoption curve chasm has been crossed.

    Last month Microsoft announced that it is joining the Linux Foundation as a high-paying Platinum member and Microsoft was not alone in 2016 many other major corporations such as Wallmart, Samsung, Uber, Spotify, Apollo, Teradata, adopted open source technologies and open standards in a serious way in addition to those who have been dedicated to open source for some time now such as Google, Facebook, Amazon and Red Hat.

    Great seeing folks understand that open source software is a positive-sum game, where the more contributors there are to the common good, the better there is for everyone. This idea is the opposite of a zero-sum game, where if someone benefits or wins, then another person must suffer or lose and that value is derived from innovation and adding values, not just in creating a software application which continues to get sold over and over without continued innovation, integration and some type of additional service or support element.

    PREDICTION: 2017 will start the mark of the Early Majority* and a new type of Information Technology Service Provider will emerge, know as the new Hybrid Service Provider who will leverage more and more open source technologies to drive down their costs and increase the value of their services and support… think based upon pitches that are simple, secure & affordable which leveraging open source software and open standards.

    Michael Proper

    *See chart for details.

      Joe Panettieri:

      Hey Michael: Always good to hear from you. Much like U.S. politics, I think there will always be extreme views in the open vs. closed source debate. But unlike U.S. politics, I think there’s a growing middle ground of people — in this case, those who believe closed source companies (i.e., Microsoft) can treat open source communities well. We’ll be watching.
      -jp

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