Microsoft Corp. on Monday (June 4, 2018) announced it has reached an agreement to acquire GitHub, the world’s leading software development platform where more than 28 million developers learn, share and collaborate to create the future. Together, the two companies will empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsoft’s developer tools and services to new audiences.
Under the terms of the agreement, Microsoft will acquire GitHub for $7.5 billion in Microsoft stock. Subject to customary closing conditions and completion of regulatory review, the acquisition is expected to close by the end of the calendar year.
GitHub is the developer company. GitHub make it easier for developers to be developers to work together, to solve challenging problems, to create the world’s most important technologies. GitHub foster a collaborative community that can come together — as individuals and in teams — to create the future of software and make a difference in the world.
Why Microsoft’s acquisition of GitHub?
“Our business strategy is to have an open platform and an open community,” Nadella said in an interview quoted by The Wall Street Journal. Chris Wanstrath, the GitHub co-founder, echoed that sentiment in a blog post about the acquisition. “Git is far and away the most popular version control system, clouds are mostly computers, and Microsoft is the most active organization on GitHub in the world. Their VS Code project alone is beloved by millions of developers, entirely open source, and built using GitHub’s Electron platform. Beyond that, today major enterprises regularly embrace open source,” he wrote. 27 million fresh users for Microsoft’s mega cloud. This acquisition of the largest code repository site in the world–with some 85 million projects and 27 million users.
Below are the main reason of acquisitions –
1) Microsoft has held talks to potentially buy GitHub, the $2 billion startup at the center of the software development world.
2) It could give Microsoft a big edge against Amazon Web Services: GitHub has 24 million users, and Microsoft needs all the developer love it can get.
3) Simple, helpful business-to-business tools build value, especially in a hypergrowth niche like developer tools. This exit will boost implied business valuation on all developer-tool business models with strong user growth. For every year of the 10 years it was in business, GitHub created $750 million of value.
4) Microsoft’s cloud dominance grows. The tech multinationals like Google, Amazon, Facebook, and Microsoft are always competing for access to a larger share of our wallets. By bolting on a big front door–in this case, the developers’ door–Microsoft continues to advance its lead in its cloud revenue acquisition, and it’s already over $6 billion a quarter. In the last three quarters, it has consistently beat Amazon and IBM. GitHub should help Microsoft widen its margins and build an even more defensible moat around cloud services. Now with GitHub providing seamless access to the earliest developer projects, its ability to “look down the road” and foresee other opportunities grows too.
5) Acquiring GitHub is also a big PR move for Microsoft. Positioning itself at the heart of open source development is a great strategy for a company desperate to shake off a legacy of “embrace, extend, and extinguish.”
6) Microsoft could also tie in GitHub to its enterprise offerings as a single bundle. I could easily see a GitHub and Visual Studio Professional/Enterprise tie-in. In fact, I imagine many would welcome it.
Despite Microsoft’s turn towards open-source, some GitHub users remain concerned that Microsoft’s leadership will undermine the core values of the system and hurt the developers that rely on it. After all, GitHub’s original vision was to build a community around code, the thesis being that by creating conversation around code, it could be truly collaborative. The acquisition is likely to attract even more teams and developers to GitHub, helping to create an even more vibrant community of integrators and developers.