The biggest tech news this week is Microsoft’s acquisition of GitHub, the collaborative software development platform. Microsoft will pay $7.5 billion in Microsoft stock to close this deal, just a little over the reported $7.4 billion profit that the Redmond-headquartered company earned for the quarter ended March 31, 2018.
Microsoft CEO Satya Nadella quickly blogged right after the official announcement and assured stakeholders, primarily in the developer community, that the blue-chip software behemoth will continue to empower developers. Nadella’s blog post and the company’s statement is being seen as Microsoft trying to pre-empt the fear and apprehension that this acquisition could create in the software developer ecosystem.
“GitHub will retain its developer-first ethos and will operate independently to provide an open platform for all developers in all industries,” Microsoft says in its announcement. “Developers will continue to be able to use the programming languages, tools and operating systems of their choice for their projects — and will still be able to deploy their code to any operating system, any cloud and any device.”
The reason for the scepticism around the acquisition of GitHub within the developer community is because Microsoft is widely believed to trust in proprietary software. Till today, nearly all its earnings come from proprietary software products like Windows OS and the hugely popular Office suite. The chart below shows the source of its revenue – almost entirely from its suite of proprietary software products and services.
What is GitHub?
As with any activity, collaborative and community-based development of software makes things easy, interesting, allows multiple people to share ideas and effort and gets things done faster. And there’s the problem of too many cooks spoiling the broth to the development of software (writing code)! Developers needed a systematic and disciplined way to write software and to work as a team. Enter source control and Git circa 2005. Git was developed by Linus Trovalds, the pioneer behind Linux, a top-class open source operating platform, which competes with Windows OS and Apple Macintosh. Git allows multiple developers to work in the same file/code without overwriting each other's changes. GitHub is built on top of Git, with added niceties like cloud hosting, automated builds, deployment of code to hosting servers, bug tracking, task management, feature request and open source code (available to everyone in the world) and the ability to make code private if you choose to do so (through paid-for subscription services on GitHub).
Developers and Microsoft
Microsoft realised that as systems and applications become more distributed and open, it needs to change its philosophy and stay relevant to increasingly open standards of development. The company learnt a hard lesson in the mobile industry where its main rivals Apple and Google took the market by storm and have continued to dominate for years. Microsoft does not exist in the mobile market even after its late acquisition of Nokia, once a global market leader.
From having missed out in mobile technology and computing, Microsoft has learned that it needs to stay relevant with the developer ecosystem and web applications space. The company has rightly understood that the developer market is a completely different ball game than the consumer market. They have made continuous efforts to win over developers over the past few years.
Microsoft's flagship tool for developers is the .NET platform and many of its languages like C# (pronounced C Sharp, a word-play to say that it is a sharper version of C/C++), VB.NET and F# run on this platform. Microsoft first released this platform back in 2002. To develop applications on top of the .NET framework, developers must use a tool called Visual Studio. Developers have had a love-hate relationship with Visual Studio because the company did not offer a decent free version of the software until as late as November 2014, when it released the Community Edition. The only free version available until 2014 was called Visual Studio Express and it had severely restricted features. The cheapest paid version of Visual Studio 2017 retails at around INR 40,000 today.
There was a time when only Java was Microsoft's real competitor for enterprise applications, but that has changed in the recent years. With nimble and faster languages like Python, Ruby, even PHP with its frameworks, it is no longer a Java, .NET and "others" scenario. The following graph from the Stack Overflow Developer Survey 2018 shows how crowded this space is becoming. To stay relevant, Microsoft has realised that it must embrace open standards and tools of software development.
What’s in it for Microsoft?
The most significant change in .NET and Visual Studio happened in April 2016, when Microsoft released Visual Studio Code and a newer sleeker variant of .NET platform called .NET Core, the first true cross platform .NET 01framework. This meant that developers on Linux and macOS could also develop applications using the .NET platform and Visual Studio. This was huge in terms of developer outreach and a necessary change for Microsoft to keep its market share in the world of web applications. This had multiple strategic reasons – apart from reaching out to developers, Microsoft also wanted to get some of the Linux Operating System-hosted applications into its Azure Cloud environment. The starting point of this is to make sure that their development platform was available across Operating Systems. This was a huge step for a company whose previous CEO infamously said, "Linux is Cancer".
Along with Visual Studio Code, a major step that Microsoft took was open sourcing the .NET Framework Core, the most modern, lightweight and fastest .NET framework in November 2014, and of course, it was added in GitHub. The other significant open sourced Microsoft products available in GitHub are the Chakra JavaScript engine of their Edge browser (though the internal code of the browser is not really open source) and the PowerShell command line tool.
It is apparent now that Microsoft needs developer communities on its side. The challenge for the company now is making developer communities believe that it is truly committed to Open Source development and not here to kill the philosophy. What better way than taking over the most coveted open source developer platforms in the world?
To be sure, Microsoft has had a taste of this already. Starting in 2006, it ran a platform called CodePlex, an open source collaborative development platform akin to GitHub. It seriously promoted CodePlex from 2010, but finally shut it down late last year, supporting users to migrate their projects to GitHub. By trailing off CodePlex and acquiring GitHub, Microsoft has shown that upping the ante within the developer ecosystem was a well-thought out strategy.
This is one more significant gain for Microsoft, having already bought LinkedIn and Skype. And arguably through these platforms, they are accruing and engaging with all the top talent the software world has to offer.
What’s in it for GitHub?
Money, of course. Analysts believe that this is a great valuation for the community coding platform, given that most of the repositories (projects) were free. Also, GitHub was bleeding money. This takeover will help investors turn finances around and give a fillip to GitHub's expansion plans.
With Microsoft’s scale, GitHub's ability to reach enterprise customers will become much better, though they already count many top corporations as their customers. The brand gets a big boost and it will also help reach people who are sceptics of Open Source Software – ‘If Microsoft is embracing open source, then it should be good!’. There are hundreds of thousands of legacy companies across the world taking baby steps in digital today and this will be a good opportunity for Microsoft to upsell GitHub.
Complementary synergies abound as well. Azure, Microsoft's cloud platform, will be a great fit for GitHub and vice versa. A closer integration will help these products take cloud computing to the next level. Visual Studio could become much more closely integrated with GitHub, though the focus will surely be on Visual Studio Code. The GitHub Marketplace will get a big boost too, with Microsoft products and the hundreds of tools that Microsoft developers use inside Visual Studio.
Are developers happy?
Initial reactions from developers are not very encouraging, and this was to be expected.
— Epileptic (@EpilepticSoft) June 4, 2018
— Vladimir Tasev (@TasevVladimir) June 5, 2018
GitLab and BitBucket, both competitors of GitHub are rubbing it in with offers, memes and tweets. GitLab made their most expensive user subscription plans free for open source projects within hours of the Microsoft-GitHub acquisition announcement. BitBucket already has a free plan with the ability to have private projects.
GitLab and BitBucket are already tweeting about a large-scale migration of projects from GitHub, showing that developers are already wary of Microsoft and its legacy. This is to the tune of 260,000+ projects in the last four days.
— GitLab (@gitlab) June 7, 2018
There are serious apprehensions and unhappy tweets about how Microsoft could end up controlling some of the most used open source software across hundreds of thousands of web applications.
Popular Products on GitHub
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Product
Description
Twitter Bootstrap
The mobile first framework
Node.js
Server Side JavaScript framework
jQuery
The most popular JavaScript framework
Ruby On Rails
Framework developed on Ruby
Angular
Rockstar JavaScript framework
Linux
Linux Kernel Source
Bitcoin
Source code for Bitcoin Core
Facebook React
Facebook's JavaScript library
django
Popular Python framework
electron
cross platform desktop JavaScript framework
As with anything, there are two sides to the story. There are a lot of developers who have expressed their support and say that ‘all we wanted Microsoft to do was to embrace open source and it is not fair to target them when they make a serious move like this’.
Woke up to 300 replies from grumpy devs about GitHub.
Guys this is 2018. Microsoft has one of the kindest, most inclusive CEO’s out there.
You demanded they changed. They have.
You demanded they embrace open source. They have.
Now it’s your turn to change and forgive.
— Kelly Sommers (@kellabyte) June 4, 2018
I'm conflicted! I see why people are so nervous about it but I'm hopeful, looking at projects like vscode, that MSFT has changed a lot for the better and can help ease any of github's financial burden. I think we'll see a lot of churn though before things settle down.
— Sarah Drasner (@sarah_edo) June 4, 2018
Many open source champions who work with Microsoft have been reassuring the community via personal tweets like Mat Velloso, Technical Advisor to CTO at Microsoft.
I don't think people understand how many of us at Microsoft love GitHub to the bottom of our hearts.
If anybody decided to mess with that community, there would be a riot to say the least
— Mat Velloso (@matvelloso) June 4, 2018
There are many who point out all that Microsoft brings to the table and say that this is a great step for GitHub. As of now, the positive sentiment seems to be drowning in a sea of negative tweets and memes.
View from competitors’ stables
Amazon, Apple and Google, Microsoft’s three fiercest rivals, have their code hosted within GitHub (on enterprise plans, of course) and it is going to take much more than publicity statements to continue to win their trust and assure them that their code will be safe in the hands of a Microsoft-owned entity.
The criticism of Apple for keeping their systems and environment so closed could grow much stronger in the days to come and there will be a lot more pressure on them to support things like OpenGL, which they deprecated just this week.
This would also place the limelight on GitHub's rivals like GitLab and BitBucket, who would gladly take in all the unhappy users and maybe set themselves up for a more politically correct marriage (read merger or acquisition) in the future.
Atlassian, the company that owns BitBucket, has seen a huge surge in its market value this week.
— Bloomberg Markets (@markets) June 7, 2018
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Going forward, there are likely to be increased mergers and acquisitions in the software industry, given that the cash-rich technology giants are looking for expertise and a headway in some of the niche, modern areas of software development, like blockchain, robotics, machine learning and domain specific software such as electronic medical records.
Can GitHub survive, possibly thrive under new owner?
The million dollar, rather 7.5-billion-dollar question is – will developers eventually embrace this transaction and will the GitHub community continue to be as vibrant and as mercurial as ever?
The entire developer community, including the author of this piece, squirmed in pain when Microsoft acquired Skype (2011). As was expected then, this move by Microsoft under Steve Ballmer resulted in a boost to the competing messaging platform Slack. Lync, a failed product, was rebranded ‘Skype for Business’. There continue to be few takers for it, except enterprises who have default subscriptions to this product along with the Microsoft Office suite. Even the free version of Skype is fast losing relevance as users move to products like Facebook Messenger and WhatsApp for personal use and Slack for business communication.
The silver lining in all this is that the Microsoft of today is very different from the Microsoft of a few years ago. Nadella’s Microsoft is not the same Ballmer company. Nadella has played a great role in changing the perception of the company in this regard. He has walked the talk as well, as seen from the much smoother and successful acquisitions of LinkedIn and Minecraft and more importantly, the free hand he has given to run the acquired entities. This should give industry watchers hope that we will not see a repeat of Skype.
Adding to this, Microsoft has been actively involved and heavily invested in open source projects like Electron, a cross platform desktop development platform that has the potential to transform how we work with desktop applications. Such actions have created a positive vibe in the community for Microsoft.
Nadella wrote in his blog that, "[GitHub’s] a destination for Microsoft too. We are the most active organization on GitHub, with more than 2 million “commits,” or updates, made to projects”. Microsoft has indeed contributed more to GitHub than Google or Apple and that is a good credential to have. Further to this, Nadella has requested developers to "judge us by the actions we have taken in the recent past, our actions today and in the future."
Another reason for hope for GitHub’s survival at the hands of Microsoft is the fact that after the deal closure, GitHub's two senior most executives will report to Scott Guthrie. A 21-year veteran and executive vice-president at Microsoft, Guthrie is well-respected and extremely famous among the developer community. He has been a developer all his life, while having climbed the corporate ladder at the software firm.
Overall, this is a big gamble for both sides. We will watch this space closely and bring you more updates.