This is the first of hopefully many posts to come where I take a closer look at what’s happening where tech, business, and (sometimes) design intersect. Today, it’s about Monday’s announcement that Microsoft is acquiring the software development platform Github. Github is a service I use nearly daily, and Microsoft is a company whose renewed vision and leadership I find really interesting to study, so I thought it was worth a look.
This Monday, Microsoft made a big announcement that they’ll be acquiring Github. It’s a bold move that caught almost everyone by surprise, and from the general reactions on social media, there’s a lot that Microsoft still need to do to earn the trust of the 28 million developers sharing their code on Github, but I think this is a smart decision by Microsoft and another item down the list of moves that align their vision for Windows for a future without the PC.
Microsoft’s Perspective: Windows as a platform
From the announcement on Microsoft’s site:
Building technology so that others can build technology is core to our mission to empower every person and every organization on the planet to achieve more.
… and Windows of the old — the operating system — fits this narrative pretty well. The value of Windows to the people (and more importantly businesses) that bought it was never the operating system itself; it was the vast ecosystem of apps and plugins and services that other people built on top to run on Windows. Windows is the platform that enabled that ecosystem to thrive.
But we’re quickly moving into a time where the PC isn’t the center of personal computing. 5–10 years down the line, most of us won’t really be “using computers” so much as using services that run on a computer somewhere, probably a datacenter hundreds of miles away. We’ll summon it through some combination of smaller, more lightweight devices, the beginning of which are smartphones and smartwatches and even the Chromebook. A PC is just not in the picture.
So Windows can’t be an operating system anymore. Microsoft lost the mobile phone fight before it really even entered it, because Windows couldn’t be the platform for mobile the same way it was the platform of PC’s. The power of Windows was the ecosystem of services that existed atop it, and it had no chance in getting that to scale on mobile, because nobody was building on Windows as a phone platform.
But now that there’s an increasingly clear picture of what comes after the smartphone — ambient computing, pervasive computing, whatever we want to call it — Microsoft really wants to be the one that runs the platform on which the next set of services and apps will be built.
Ben Thompson wrote in his weekly column this week:
Lacking a platform with sufficient users to attract developers, Microsoft has to “acquire” developers directly through superior tooling and now, with GitHub, a superior cloud offering with a meaningful amount of network effects. The problem is that acquiring developers in this way, without the leverage of users, is extraordinarily expensive; it is very hard to imagine GitHub ever generating the sort of revenue that justifies this purchase price.
So Microsoft’s acquisition of Github is the purest example of a strategic buy. It matters little if Github’s current business model in and of itself will generate superb cash flow in the years to come. What Microsoft needs right now is a way to ensure that it has the best chance at being the platform on which the next generation of services, most likely running on cloud platforms like Azure, will be built.
In fact, Satya Nadella goes on further to specify some ways Microsoft will accelerate that process:
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. (emphasis mine)
The last sentence is the part of Github worth $7.5 billion to Microsoft. We’re going to see Microsoft do as much as possible to keep Github unchanged as the place where developers congregate and share code and discussion, because that’s the value of Github and why developers come to it. But we’re going to see integrations between Github as a place for code authoring and storage, and Microsoft/Azure as a place where that code can run, so as many developers from Github become developers on the Windows/Microsoft platform.
Windows has traditionally been the “PC’s operating system”. It’s the software that sits inside the hard drive of your laptop or computer, and very occasionally your phone, and allows you to use Windows apps on top of it. It’s a physical, hands-on, local experience that lives on single, tangible devices.
But for the last 3–4 years now, Microsoft has switched their rhetoric to a different vision for Windows that stretches beyond devices with big screens and keyboards, in preparation for a world that’s seeing less and less popularity of the PC itself. In the last year, Microsoft has transitioned from calling Windows an “operating system,” in favor of the phrase “Windows platform”. And that, combined with the recent reorganization around Microsoft services at the forefront, sheds an unmistakable spotlight onto Microsoft’s vision for Windows 5–10 years down the line: Windows won’t be an operating system any more than Google is a search box to query a database. It’ll be one of the manifestations of Windows as a service, but Windows as a whole will become much broader and live in more places. And to make that adapting vision for Windows come true without repeating the fiasco that was Windows Phone, Microsoft needs to once again be where developers build. And buying Github, and its developers with it, is one way to try to catch up.
Github’s Perspective: the best timeline
In the grand scheme of things, this is one of the best timelines for Github’s possible exit, both in terms of Github’s place in the larger industry, and in terms of Github as a Silicon Valley company.
For the value that Github’s product provides, their financials weren’t looking commensurately promising. It isn’t a hyperbole to say that Github’s products make large parts of Silicon Valley run in 2018. Some of the biggest open-source projects, including most of the top machine learning and web development tools like Tensorflow and React, are built and developed on Github. In comparison to the value that it provides the industry and the hundreds of millions of dollars they’ve raised in venture capital, Github’s current business model wasn’t going to bring in the 10–20x returns that VC’s typically look for in a successful investment by continuing to operate alone.
With Microsoft’s acquisition, Github, or at least their investors, found a second way to monetize Github’s full value to the industry.
It’s difficult to tell where exactly Microsoft will want to take Github’s products. There’s a good chance the core product offerings remain the same, albeit with better enterprise focus and slicker integrations to Microsoft’s cloud platform Azure — this is what the original note about the acquisition seems to point to. And there’s precedent for acquisitions where the original business was left more or less unchanged— Wunderlist and LinkedIn, for example.
But in general, past acquisitions of big tech companies by Microsoft have more often been curses than blessings. Skype, for example, survives in 2018 but only as a utility everyone begrudgingly uses, and whose user interfaces goes through a mercurial teenager phase every few quarters. Sunrise Calendar, another generally beloved product bought out by Microsoft, was almost immediately killed, its undead apparition buried deep into Microsoft Outlook.
As a developer, having watched Microsoft’s relationships with the developer community evolve over the last two years, I have faith in Microsoft that it can build tools that help, rather than hinder, developers. Recent products from Microsoft like Visual Studio Code, TypeScript, and the community around the Edge browser have been right there alongside Google’s and Apple’s offerings in making valuable tools for developers to succeed.
For developers and the tech entrepreneurship ecosystem, not just in the Valley but around the world, Github is a unique resource without equal. So what happens to Github or with Github at Microsoft is a big question mark for a lot of people who use and benefit from the huge repository of often open-source knowledge that lives on it. Credit where it’s due, Microsoft seems determined not to let down those developers. And it makes sense — it’s more than just the $7.5 billion riding on Github’s future, it’s also the future of Windows as a platform for the rest of the industry.
