Summary: Microsoft has agreed to buy online code repository GitHub for $7.5b in a deal that is expected to close by the end of the year.
What will happen: GitHub will be operated independently within Microsoft’s Cloud and Enterprise business under the leadership of Nat Friedman, who joined Microsoft in February as corporate VP, developer services. He will report to Scott Guthrie, who is the EVP of the Microsoft Cloud and AI Group. GitHub co-founder Chris Wanstrath will become a Microsoft technical fellow working on strategic software programmes. Microsoft confirmed GitHub will continue to support development in various programming languages with a range of tools, and that code will be able to be deployed on any OS, cloud platform or device. The company also plans to introduce some of its tools to GitHub to broaden the options for developers.
What is GitHub: GitHub is a widely used open development platform for storing and collaborating on code. GitHub runs an open platform on its own or you can deploy an enterprise version on-premise, in a private cloud or on the public cloud. Managed hosting/MSP partners host GitHub instances and Contegix in St. Louis is one of those that is doing this on AWS. As mentioned above, Microsoft plans to continue supporting multiple clouds.
About: San Francisco-based GitHub was founded in 2008 and had secured $350m in two funding rounds. It was valued at $2b in 2015. It’s not just an essential tool/social network for coders but is used by corporations – including Microsoft and Google – to store their corporate code and collaborate. It has 28m registered users and 85m repositories but has yet to post a profit and had been searching for a new CEO since August last year to replace Wanstrath. Chief business officer Julio Avalos had joined the board and taken over much of the day-to-day leadership but a new CEO had proved elusive. It is said to generate over $100m in annual revenue.
Angle: After building its business on the back of proprietary software, Microsoft has increasingly embraced open source over the years. Azure, for example, enables customers to host a variety of Linux workloads, and Microsoft has open sourced the code of some of its Azure services and Visual Studio developer tools through GitHub. Indeed, Microsoft is said to be the biggest contributors to GitHub. Developers have been split on the deal, with some questioning whether Microsoft will really keep GitHub independent but others acknowledging the company needed a lifeline. Some developers have already moved to GitHub alternatives, but it’s likely that the majority will continue with GitHub given its prominence in the market. And that is why Microsoft is acquiring GitHub: it wants and needs to remain front and centre and stay intimately involved with developers. Through this ecosystem/community, it can introduce developers to its toolsets and of course, the Azure cloud infrastructure platform. And conversely, it can introduce enterprise developers to GitHub. At the end of the day, it is all about finding new and productive ways of connecting with the developer community. Microsoft has come a long way on its journey and has fully embraced open source. It is now less focused on erecting walls and barriers, but knocking them down and creating ecosystems of value instead. Through these ecosystems, it will be able to push its technology and services through both traditional sales processes, but more importantly, though collaboration and evangelism.
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