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Jnan Dash

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Microsoft buys GitHub for $7.5B

This morning Microsoft announced the acquisition of Github for $7.5B. Why this makes immense sense? There are three main angles here: winning developers mindset and loyalty, pushing them closer to adopting Azure cloud at runtime, and a skills hookup with LinkedIn, another Microsoft acquisition from last year. Let’s see each point.

Developer love-fest

On the most surface level, the logic of buying GitHub is pretty clear. Developers love GitHub, and Microsoft needs the love of developers. Github is an online service that allows developers to host their software projects. From there, anyone can download those projects and submit improvements. That functionality has made GitHub the center of the open-source software development world. Microsoft offers a whole swath of tools for developers, including the increasingly popular Visual Studio Code software and the open-source .NET Core programming framework. The popularity of these kinds of tools provides a gentle, but apparently effective, funnel toward the Microsoft Azure cloud and other Microsoft products and services — if you like one Microsoft product, it’s more likely that you’ll choose other Microsoft products, especially if they integrate cleanly.

GitHub would just add to that strategy: Developers already love GitHub — in fact, in 2017, Microsoft killed Codeplex, its own GitHub competitor, saying GitHub’s popularity made its own efforts redundant and unnecessary. By owning GitHub, Microsoft would have a direct line to millions of highly engaged developers. We’ve already seen baby steps in this direction, as GitHub and Microsoft just this month announced integrations between their services.

Push Azure Cloud against AWS

AWS is the leader in cloud deployment with a run-rate of over $20B ($5.6B in first quarter revenue yielding 73% of Amazon’s total operating income). GitHub users get software developed and ready using the open source tools available, but running it is another story. Often they go to AWS as the default run-time platform.

Microsoft is laser-focused on the continued growth of its cloud-computing business. So the opportunity for Microsoft is fairly straightforward. If it can get the Microsoft Azure cloud tightly integrated with GitHub — basically, give developers an easy way to get a GitHub project up and running in the cloud — it can kill two birds with one stone. Developers could love GitHub even more, and it would drive more use of Microsoft Azure. It would be a weapon in Microsoft’s arsenal to close the gap between Azure and Amazon Web Services.

LinkedIn + GitHub

What does this mean? When Microsoft spent over $26 billion on LinkedIn last year, CEO Satya Nadella said the company was investing heavily in making sure that current and future workers had the skills they needed to succeed in the modern economy. In Silicon Valley, at least, it’s not uncommon for an employer to ask for a GitHub profile alongside — or instead of — a traditional resumé. If Microsoft is trying to understand the modern skills economy, GitHub could provide a compelling glimpse. So the GitHub push can be about helping developers work together as software becomes key to doing business at almost every company.

I am glad that Microsoft is making aggressive moves to give a fight to AWS. It’s time we see a tough competition for AWS as it gets bigger and stronger of monopolistic proportion.

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More Stories By Jnan Dash

Jnan Dash is Senior Advisor at EZShield Inc., Advisor at ScaleDB and Board Member at Compassites Software Solutions. He has lived in Silicon Valley since 1979. Formerly he was the Chief Strategy Officer (Consulting) at Curl Inc., before which he spent ten years at Oracle Corporation and was the Group Vice President, Systems Architecture and Technology till 2002. He was responsible for setting Oracle's core database and application server product directions and interacted with customers worldwide in translating future needs to product plans. Before that he spent 16 years at IBM. He blogs at http://jnandash.ulitzer.com.