Microsoft bolstered its open source stance, announcing plans to acquire development platform GitHub for $7.5 billion. The move better positions the software giant’s presence with developers and its ability to compete against cloud rivals Amazon Web Services (AWS) and Google.
During a conference call to announce the deal, management from both Microsoft and GitHub stressed the growing importance of developers to driving software innovation.
“The era of the intelligent cloud and intelligent edge is upon us,” said Microsoft CEO Satya Nadella. “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. And developers are builders on this new era, writing the world’s code.”
GitHub will continue to operate independently, but it will come under Microsoft’s cloud business.
Microsoft’s Azure is currently the world’s second-largest cloud provider behind AWS. The company reported a 58 percent year-over-year increase in commercial cloud revenues to $6 billion for its most recent fiscal quarter. Those results included a 93 percent increase in Azure cloud service revenue.
Jack Gold, president and principal analyst at J.Gold Associates, noted that the move would allow Microsoft to be more appealing to developers and more competitive against AWS and Google.
“This could help them greatly take market share against other providers (AWS, Google) in the battle to increase Azure’s market presence in commercial apps where Azure isn’t as strong as it is in the enterprise,” Gold said.
All-In on Open Source
The announcement also stressed the continuing independent nature of GitHub. Nadella explained that developers would continue to have access to their current pool of programming languages, tools, and operating systems (OS). Code developed in GitHub will also continue to be deployable to any OS, cloud platform, or device.
“We’ve always loved developers, and we love open source developers,” Nadella said.
Nadella did state that Microsoft would introduce some of its tools to the platform in a move to boost developer options. Gold said those tools could be beneficial to developers, but the gains would be somewhat muted as they would be Microsoft-centric.
Microsoft had historically been averse to open source software platforms like Linux. Former CEO Steve Ballmer at one point called such platforms a “cancer.”
However, under Nadella, Microsoft has begun to embrace open source as an integral component of its push into the cloud space. This includes its joining of the Linux Foundation in late 2016; joining the Cloud Native Computing Foundation (CNCF) last July; and fully embracing the open source Kubernetes container orchestrator as key to its cloud operations.
“Today, we are all-in with open source,” Nadella said. “When it comes to our commitment to open source, judge us by the action we have taken in the recent past, our actions today, and in the future.”
GitHub was founded in early 2008 as a platform where developers could share and work with open source software. Today, it has more than 28 million registered users and 85 million repositories.
The platform has secured $350 million in two funding rounds that included Sequoia Capital, Andreessen Horowitz, Thrive Capital, and Institutional Venture Partners.
GitHub’s current CEO Chris Wanstrath will move to a technical fellow position at Microsoft where he will work on strategic software programs. Nat Friedman, who is currently corporate vice president at Microsoft and was founder of mobile application developer Xamarin, which Microsoft acquired in early 2016, will become CEO of GitHub. Both will report to Scott Guthrie, who is executive vice president of Microsoft’s Cloud and Enterprise business.
The deal is expected to close by year-end. GitHub will get its billions via Microsoft stock that the computing giant will take from the $30 billion currently set aside for its stock repurchase program.