Deal of the Year: Microsoft's GitHub acquisition

Highlights

Size of the deal:

Acquired by Microsoft for $7.5 billion, GitHub has over 31 million registered users worldwide with 96 million repositories.

In the enterprise:

On top of a robust public developer community, GitHub touts 2.1 million organizations as customers.

Outlook:

By courting the developer ecosystem, Microsoft can make more developers comfortable with its technology, boosting support and adoption, especially when it comes to Azure.

When Microsoft announced the acquisition of GitHub in June, it achieved something no other cloud leader could claim: Direct access to the developer community at large.

For the future of digital business, "modernization is going to come on the backs of well-executed, well-architected software products," said Blair Frank, enterprise technology analyst at ISG, in an interview with CIO Dive.

Software drives the overwhelming majority of processes across business and consumer worlds, according to Frank. Developers are the "people who have the skills necessary to execute the strategic visions of the future."

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In the cloud market, adoption is top-down: Big transformation initiatives start in executive offices that direct cloud strategy. But before that, individuals or groups of developers will start using cloud services to solve a particular problem, sometimes introducing new tools.

"The rise of open source and the rise of the developer as a key actor in the technology procurement process means that it is an absolute no brainer for Microsoft to pick up really the core of the developer workflow in 2018," Frank said.

GitHub is central to how developers work, serving as resumes and documentation of projects executed in someone's spare time. By operating that space, Microsoft can keep up with trends, anticipate needs and encourage new types of development.

Blair Frank

Enterprise technology analyst at ISG

Put simply, Microsoft's GitHub acquisition is an effort to win the hearts and minds of developers, bucking the proprietary reputation of its past.

The deal is an attempt to "ingratiate" the company to the next generation of CIOs — the people who were developers 10 years ago and who remember Microsoft's vendor lock-in reputation, according to Lyndsy Simon, senior software engineer at GoodRx. Now in leadership roles, previous generations of developers will guide strategic technology acquisitions for their business, and Microsoft has to woo them to ensure its long-term place in the market.

The developer community aside, Microsoft's acquisition offers another ripe piece of business: GitHub Enterprise.

GitHub Enterprise allows organizations to run GitHub on premise and acts as a real solution for teams. Under Microsoft's purview, it can package the on-prem offerings and integrate it into the Visual Studio suite, according to Kenneth Reitz, software engineer and former board member of the Python software foundation. The benefits of the acquisition for the developer community act as icing for the deal.

Hearts and minds

Not everyone is enthusiastic about Microsoft's increased influence and pending control of a key tool for the developer community. Decades' worth of cynicism was intensified by the "embrace, extend, extinguish" reputation of Microsoft, according to Frank.

Skeptics readily recall former Microsoft CEO Steve Ballmer calling Linux a cancer rather than the company's recent overtures about its love of Linux.

"As a developer I've stayed away from Microsoft products as much as I can," said Simon. "That's not for necessarily ideological reasons, but practical ones."

Microsoft has a history of investing in technology, then retiring it, impacting those who operate systems.

Microsoft, however, has done an about-face in recent years by embracing open source and supporting the developer community at large. In October, Microsoft joined the Open Invention Network, making more than 60,000 patents open source, in a move to protect Linux and other open source efforts from "patent assertions."

Microsoft continues to be the leading contributor on GitHub, highlighting its commitment to open source.

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The GitHub deal offers more direct control over the direction of GitHub and, by extension, the development community.

"If Microsoft were to abandon its newfound open source credentials and its newfound ethos of fostering open source development, it could do significant damage to the community," Simon said, "particularly if there's not another mature offering out there that's ready to take up the slack."

The development community's rejection of Microsoft's GitHub acquisition is not guaranteed. Some developers, like Simon, have moved their code repositories off of GitHub (though Simon made the switch to GitLab two to three years ago, before the deal was announced). Their code transitions speak to the health of the overall community.

As a central repository, GitHub is the largest social network of developers in the world.

"If Microsoft were to abandon its newfound open source credentials and its newfound ethos of fostering open source development, it could do significant damage to the community."

Lyndsy Simon

Senior software engineer at GoodRx

"It's something of a monoculture, and while they're doing good things and I haven't seen anything in particular that really raises my hackles and makes me want to move away, I think it's healthier for the community to have multiple mature options out there," Simon said.

Even if Microsoft's acquisition upsets some developers, the decentralization of Git repositories will have a positive impact on the community.

Some in the community are still hesitant to trust Microsoft, but its stewardship toward developers through heavy open source contributions and offering Linux, for example, can work to convince more developers, Reitz said. But to spur further support, it's up to developers and a grassroots movement to convince the rest of the developer community of Microsoft's intentions.