Yesterday Microsoft announced that they are acquiring GitHub, the company behind source code repository focussed on developers. Of course, since the acquiring company is Microsoft, the social media are full of skepticism and parody. Leaving aside all the noise that happens when such a huge acquisition happens, we want to do a quick analysis of the top news of the day in the Modern Enterprise market. We will take a question and answer approach to the analysis.
What is the news?
Microsoft acquires GitHub for more than $7.5 Billion in stocks. The deal is expected to close later this year after the approvals from the regulatory bodies in the US and Europe.
Why is this a big news?
GitHub is one of the largest repositories of software code and the top repository for open source software. This is the collaboration headquarters for developers and, of late, this is attracting everyone from data scientists to content creators. We have our research repository hosted on GitHub. It is the largest social network for developers and has tons of information about developers, their organization, their software contribution and most open source projects in the form of metadata which they own. Mining this data will give Microsoft a great advantage in the application developer market. The importance of this news can be compared to Microsoft’s own acquisition of LinkedIn or Facebook’s acquisition of Instagram and WhatsApp.
Even though Git solved the developer workflow problem, it was GitHub that made code development more social and made it easy for software teams/communities to collaborate more seamlessly around code. I would even claim that it is much easier to create a community on any topic using GitHub than traditional community tools. For many developers, their GitHub profile has become the honor badge, talent showcase or even resume. We have hired a few contractors just based on their profiles and it has worked out well. GitHub has become a very valuable developer network for any company that is serious about developers.
What does it mean for GitHub?
GitHub has emerged as the defacto landing location for software code (both open source and proprietary). Even though they were well funded and had a decent annual revenue, they were beset with internal culture issues and there was grumbling among users about the slow pace of innovation. Fixing the internal issues while meeting the needs of the investors (to a possible IPO) was going to be a long slog. This deal gives GitHub an easy fix to their problems along with a steady source of funding for their future innovation. Microsoft has made it clear that they are going to let GitHub stay independent, at least in the near future. This gives GitHub an opportunity to focus on product and community without worrying about meeting the financial and business needs. Microsoft’s sales teams provide the necessary muscle for GitHub to build out their enterprise business. In other words, this deal lets the concept of GitHub live without any immediate turmoil.
What does it mean for Microsoft?
Microsoft stands to gain the most from this acquisition provided they execute well in the post-acquisition phase. In spite of network effects and data gravity issues, GitHub will fast lose its relevancy if the community feels that they are being taken for a ride by Microsoft. Microsoft should strive to gain the trust of communities on GitHub. Microsoft today is a far different company than one from Ballmer era. In spite of a new Microsoft putting open source at the front and center of the company, they have to treat GitHub as day one of community building. They need to earn the trust of the communities around every single repo and any bad press will result in large-scale migration out of GitHub. The responsibility to continue nurturing the open source culture present in the GitHub repos and further strengthening these communities are with Microsoft. They own it and they better not break it.
Benefits for Microsoft
- It will help Microsoft go back to their roots, the developers. As Microsoft matured as an enterprise company, they lost their developer mojo and they had difficulty finding that mojo in the early days of cloud computing. Even though their transformation under Satya Nadella is helping them gain traction with open source and younger developers, GitHub can serve as a platform they use to reach the developers. The key here is to not screw up their execution and double down on community building
- Helps Microsoft build an end to end DevOps story to both Intelligent Cloud and Intelligent Edge. There is an opportunity to build a great story spanning the code lifecycle from the developer laptop to cloud to edge. By doubling down on GitHub for Enterprise and seamless integration with Visual Studio portfolio, Azure Cloud and AzureStack, they can make their end to end DevOps story for Intelligent Cloud and Intelligent Edge attractive for modern enterprise decision makers
- With Containers losing some steam among Developers and Serverless or Functions as a Service gaining attention, GitHub could be a good starting point for the Azure ecosystem. Microsoft should put this acquisition at the core of Azure developer experience
- The most interesting aspect of this acquisition for me is the treasure trove of data Microsoft can access. Just like how LinkedIn has the social graph of professionals, GitHub has the social graph of developers. Between these two they have critical information that every business leader would want to have. There are many ways in which Microsoft can put it to use. But they need to do it in such a way that it doesn’t offend the developer communities. I would watch this closely to see how Microsoft is going to take advantage of the insights hidden in the service
What does it mean for developers?
OSS puritans are going to be upset about Microsoft owning GitHub as they have enough baggage from the past. I am a hardcore OSS advocate myself and I have criticized Microsoft heavily for their anti-OSS stance. But if I were a developer today, I wouldn’t hold it against them. Yes, some OSS projects will move out of GitHub but I don’t expect large-scale exodus at this point
What does it mean for Modern Enterprise Decision Makers?
Having a big enterprise cloud leader like Microsoft behind GitHub gives them confidence and takes out unpredictability associated with smaller vendors. For organizations using Azure, they can expect better integration between GitHub and other Microsoft services. If you are not a Microsoft shop or don’t want to deal with Microsoft for political reasons, we would recommend alternatives (some are listed below).
Who are the competitors?
Bitbucket by Atlassian, Gitlabs, Assembla, and Glitch. Bitbucket and Assembla are focussed on enterprises with Gitlabs ramping up their enterprise ambitions.
What Microsoft can do with GitHub in targeting developers and in enhancing developer workflow for Azure services is fairly obvious. What is not obvious is how they are going to tap into the data available on GitHub and LinkedIn to help modern enterprises. In fact, as the world moves towards gig economy, these two services will have a treasure trove of data to be the pillars of that economy.