“Developers are the builders of this new era, writing the world’s code. And GitHub is their home.” – Satya Nadella.

Gist:

• Microsoft has agreed to acquire GitHub for $7.5 billion.
• Nat Friedman, former CEO of Xamarin (acquired by Microsoft in 2016), will take over as CEO.
• Chris Wanstrath, co-founder of GitHub, will join Microsoft as a technical fellow.

A bit about GitHub

GitHub itself is an interesting product. Git was created by Linus Torvalds for version control of Linux. As with any project created by Torvalds, Git has an extremely elegant code and design.

Tom Preston-Werner took Git and created a code hosting company called GitHub around it. Today GitHub is the world’s biggest Open Source repository with over 20 million users and 57 million repositories. Ironically, the project which is based on Open Source Git and hosts Open Source code base is itself fully proprietary.

The platform became the most popular code hosting platform, so much so that even Microsoft and Google shut down their own code hosting platforms (CodePlex and Google Code, respectively) and moved to GitHub.

However, it didn’t succeed in creating a sustainable business model around it. GitHub offers its code-hosting service for free, there are some paid plans that allows enterprise customers to have private repositories.

According to reports, GitHub lost over $66 million in 2016. At the same time GitLab, a fully open source and decentralized service is gaining momentum, giving users a fully open source alternative.

Preston-Werner left the company in 2014, after harassment reports. Another co-founder and CEO, Chris Wanstrath, also stepped down from his role last year awaiting a replacement.

In a nutshell, GitHub is going through the same phase most start-ups go through. They created a great product, but it has limited growth prospects. Acquisitions are the ultimate destination of most such start-ups.

The big question is who wants to acquire it? Companies like these don’t really bring any market value, but they do bring technologies and mindshare.

Ever since Nadella took the helm of Microsoft, he has been steering Microsoft away from the legacy dead sea and cruising into the open waters of cloud, mobile and open source.

Microsoft is already the largest contributor on GitHub. The company has not only open sourced some of its enterprise products, it’s also engaging and giving back to major open source projects like Kubernetes.

“We have been on a journey with open source, and today we are active in the open source ecosystem, we contribute to open source projects, and some of our most vibrant developer tools and frameworks are open source. When it comes to our commitment to open source, judge us by the actions we have taken in the recent past, our actions today, and in the future,” said Nadella in a blog post.

Recently, Microsoft partnered with GitHub to integrate Azure mobile Continuous Integration directly into iOS, Android, Xamarin, and React Native repositories. Once you start working closely with a big company like Microsoft, they start to feel your pain. They want to help you.

Longevity is the pain point for GitHub. It could not survive very long on its own. It needed some help and Microsoft is offering that help by acquiring the company.

Post acquisition, GitHub will benefit from the deep pockets of Microsoft and be able to not only survive but grow. At the same time Microsoft will be able to start integrating GitHub with its Azure based services. It’s a win-win situation for both companies.

Nadella has laid out a three-point strategy for GitHub:

• First, we will empower developers at every stage of the development lifecycle – from ideation to collaboration to deployment to the cloud. Going forward, GitHub will remain an open platform, which any developer can plug into and extend. 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 on any cloud and any device.
• Second, we will accelerate enterprise developers’ use of GitHub, with our direct sales and partner channels and access to Microsoft’s global cloud infrastructure and services.
• Finally, we will bring Microsoft’s developer tools and services to new audiences.

It’s a win-win situation for GitHub users, too. They now know that the service they use is financially stable.

“Given all of this, together with GitHub, we see three clear opportunities ahead,” said Nadella.

I agree!