Advertisement Advertisement

For Microsoft Corp. acquiring GitHub Inc. is a self vindicated Business Strategy - Not a Financial artifice …

#Microsoft ; #GitHub ; MicrosoftAccuringGitHub


For Microsoft Corp. acquiring GitHub Inc. the most admired coding platform where developers share and collaborate on projects, for $7.5 billion worth of Microsoft stock.This deal will intensify the company’s relationship with developers and allow its tools to hold out a broader audience within the world of open-source software, both a fling back to the company’s earliest roots and a sharp turnaround from where it was a decade ago. More than 28 million developers around the world use GitHub, Microsoft said, acknowledging the crucial role that developers have played in revolutionizing the modern economy. “Today, every company is becoming a software company and developers are at the center of digital transformation,” Microsoft said in a news release.


Microsoft’s origin story lies in the market for software-development tools. Bill Gates and Paul Allen co-founded the company to give hobbyists a way to program a new micro-computer kit, the MITS Altair. Decades before former Chief Executive Officer Steve Ballmer jumped up and down on a stage, whooping for " Developers, Developers and Developers ....!!! ". At the same time Microsoft has talked to GitHub, which hosts 27 million software developers working on 80 million repositories of code, on and off for a few years. Recently they began talks about a partnership but progressed to discussing an acquisition, according to another person familiar with the situation. The Redmond, Wash., company, which said it is the most active organization on GitHub, also plans to accelerate the use of the platform by businesses, relying on its sales team, existing corporate partnerships and cloud computing infrastructure.The deal also reinforces a core aspect of Microsoft’s identity. "Developers or software development has been essential to Microsoft’s business strategy for decades," Jay Vleeschhouwer, the managing director of software research at Griffin Securities, said. "This is logically connected to Microsoft’s DNA around software Development.”


Open-source software allows developers to tinker with, improve upon and share code -- an approach that threatened Microsoft’s business model. A lot has changed since then, and under CEO Satya Nadella, Microsoft is supporting many flavors of Linux and has used open-source models on some significant cloud and developer products itself. GitHub preferred selling the company to going public and chose Microsoft partially because it was impressed by Nadella, said one of the people, who asked not to be identified discussing private information. Terms of the agreement weren’t known on Sunday. GitHub was last valued at $2 billion in 2015.


San Francisco-based GitHub is an essential tool for coders. Many corporations, including Microsoft and Alphabet Inc.’s Google, use it to store their corporate code and to collaborate. It’s also a social network of sorts for developers. Still, GitHub’s losses have been significant -- it lost $66 million over three quarters in 2016 -- and it has been hunting for a new CEO for nine months. The company had revenue of $98 million in nine months of 2016.


In August, GitHub announced that it was looking for a CEO to replace Chris Wanstrath, one of the company’s co-founders. In the interim, GitHub’s Chief Business Officer Julio Avalos joined the company’s board of directors and took over much of the day-to-day leadership of the company.


GitHub will continue to remain an open platform that is independently operated, Microsoft said. The tech giant’s vice president of developer services, Nat Friedman, will become the new head of GitHub. The deal is expected to close later this year if it passes regulatory review. The pending acquisition arrives at a time of explosive growth for the cloud industry. Cloud services will account for a staggering $186 billion this year — up more than 21 percent from last year — according to estimates by Gartner, an IT research firm. The industry is expected to continue to grow, crossing the $300 billion mark by 2021. GitHub, analysts say, could help Microsoft seize on that growth by drawing new developers to its cloud platform, Azure. The deal could give Microsoft a more prominent role within the ecosystem of independent cloud developers, who build software that runs on cloud platforms like Azure and’s AWS, said Kirk Materne, an analyst at research firm Evercore ISI, in an investors’ note. That ecosystem has been dominated by Amazon, he said.


Talks of the deal were first reported by Business Insider last week in a report that noted GitHub’s recent reluctance to sell itself to another company; GitHub was previously valued at $2 billion in 2015 and Microsoft's stock closed up 0.87 percent to $101.67 Monday.


While Microsoft’s acquisition of GitHub is major news, It is just another long line of a basic truth of a most succesfull hi-tech farm is going to command the Cloud Computing System by drawing the new developers to its cloud platform, Azure returning to the company’s earliest roots and a sharp turnaround from where it was a decade ago, by building a self-sustaining business is the exception, not the rule , a Strategy, not a financial manoeuvre, value is what drives most successful outcomes. 

Related Articles