Microsoft’s mega $7.5 billion all-stock purchase of developer platform GitHub is good for the tech sector at large and for the ‘internet of things’ (IoT) market in particular, provided the US computing giant demonstrates a lightness touch in its integration work and avoids a “mass exodus” of IoT developers, reckon industry commentators.
San Francisco based GitHub is perceived as the go-to platform for IoT developers, and a default destination, notably, for the smart cities market, as well as in the broad enterprise IoT space. It claims more than 28 million software developers, from 2,000 a decade ago, and 85 million code repositories.
Leading smart cities, including the likes of Amsterdam, Barcelona and Bristol in Europe, have fostered start-up communities around code sharing on the platform. IoT developers are collaborating on open source projects such as the ThingsBoard platform via GitHub. It is also a conduit for the open source elements of popular low-power wide-area (LPWA) networking technologies like LoRaWAN and Sigfox.
Microsoft, which reportedly fought off competition from Google for the deal, is the most active organisation on GitHub, with two million “commits,” or updates, made to projects. It’s a major destination for Google and AWS too. But is Microsoft’s ownership, expected to close by year-end, good for the IoT developer market? The answer is ‘yes’, says commentators, but there are caveats; Microsoft must keep its dad-hands away, and kept busy with day-to-day sales and marketing.
“Yes, so long as Microsoft continues to evolve it as an open platform and marketplace, the deal should be beneficial for both companies and the developer community as a whole. The new capital and resources GitHub will have access to – for example, a worldwide sales force – as a result of the acquisition should also encourage competitors to raise their efforts,” commented Marta Muñoz, research director at IDC.
Jack Vernon, industry analyst at ABI Research, is more cautious. “It remains to be seen. Microsoft has been viewed as a hater of open source in the past. In the smart phone market, this approach proved critical to its downfall.”
Fears Microsoft will integrate GitHub into its Microsoft Azure cloud service, and use GitHub to push IoT developers towards Azure services, are “legitimate,” he said, and are deepened by the new management structure, which will see GitHub fronted by Xamarin founder Nat Friedman, who will report to Microsoft’s head of cloud and AI Scott Guthrie.
If Microsoft pursues a deeper integration of the two platforms, it will see a “mass exodus of developers,” said Vernon. Rival repositories like GitLab have already seen an increase in the number of projects being entered onto their platforms, noted Vernon.
“Microsoft’s major technology competitors may not like the idea of having the GitHub platform directed by the company and encourage use of other platforms. A side effect of this could be a larger number of IoT developers following suit and embrace other platforms.”
He added: “A sensible leverage would be to simply host GitHub on Azure, cutting GitHub’s operating costs.”
Rafael Laguna, chief executive at Open-Xchange, quoted elsewhere, points to Microsoft’s acquisitions of Nokia and Skype. “Both have become infinitely less popular and innovative since being acquired by Microsoft,” he said.
“Microsoft was essentially at war with open source just twenty and ten years ago – with former chief Steve Ballmer alleging that Linux violated 235 of its patents and continually referring to Linux as ‘cancer’. It doesn’t surprise me GitHub users are currently uneasy with this acquisition.”
But Satya Nadella, chief executive at Microsoft since 2014, is credited with refreshing the Redmond company’s position and profile, and developing a counter-narrative about Microsoft’s deep engagement with the open-source community. Vernon acknowledges this, citing its position as lead of the MXNet open source AI framework, and its move to open-source software such as PowerShell, Visual Studio Code and JavaScript.
“Microsoft will treat the acquisition of GitHub much the same as it has LinkedIn. The fundamentals of Linkedin remained largely unchanged after the acquisition. Microsoft gave Linkedin a re-skin and restructure so commercial use of the platform by recruiters was more challenging, pushing more towards its paid subscription services,” said Vernon.
The idea, also mooted, that GitHub may even be integrated with LinkedIn would be a “misstep”, he said. More likely, given Friedman’s proposed stewardship, GitHub will be integrated in some fashion with Xamarin, another open source platform, albeit focused at mobile app design.
“It is difficult to speculate how this integration may take place, but it maybe that a premium GitHub service would include some means of allowing pieces of code be compiled into the modular development tools present in Xamarin,” said Vernon.
Merv Adrian, research vice president at Gartner, commented in a blog post: “Microsoft’s interest is in further elevating its open source profile; there is already a lot of scepticism from developers. But developers are part of Microsoft’s DNA – it has always been a company for developers, and the growth of open source communities in the internet era offers an opportunity to revisit and re-energize that aspect of its profile.
“While it has had mixed results in some of its acquisitions over the years, its ownership of LinkedIn has produced subscriber growth and revenue growth, while maintaining an effectively open environment. Its ability to bring some stability to GitHub and provide the needed resources to help it grow make for a powerful opportunity.”
Microsoft’s $7/5 billion valuation of GitHub is based on 25 times its reported revenues, of $300 million, most of which are accrued through its subscription platform. “Microsoft clearly believes that it can extract additional value from the subscriber base and push more developers towards subscribing. If Microsoft takes this approach it will have to tread carefully – understanding what developers will tolerate will be critical,” says Vernon.
“Microsoft will benefit from some degree of developer lock-in to GitHub, as migrating projects to a different code manager would require effort, coordination, and for developer to familiarise themselves with a new platform. It is the balancing act of extracting additional value from the platform while at the same time preserving the integral functions of GitHub that Microsoft will have to get right – IoT developers may fall fowl of Microsoft’s missteps in this respect.”
Adrian said: “Microsoft has not articulated how it will make money through this acquisition, although it is consistent with the need to attract developers to the Azure platform. Microsoft has hinted at plans to increase the connection between GitHub and Azure – although they’ve said any features would be open to any platform, further broadening the story.
He added: “Microsoft will have to demonstrate to the developer community that GitHub remains a safe and trusted environment to build and managed code.”
Will IoT developers stick with the platform; will new developers be attracted to it? “It’s difficult to say at this point. It is in Microsoft´s interest, as it says itself, to maintain the same independence the platform has provided until now, and not to lose the trust of the developer community, nor the market. The financial stability the acquisition offers might also attract new developers to the platform,” commented Muñoz.
Indeed, the word from Microsoft, unsurprisingly, is it will leave alone, and maintain it as an open source platform, keeping its identity and management distinct from Microsoft’s.
“Microsoft is all-in on open source. 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,” Nadella said in a blog post.
The careful message was widely circulated. In the New York Times, Xamarin founder Friedman, taking charge of GitHub for Microsoft, said ownership would see Microsoft “confidently go all-in on GitHub.” Microsoft will make nearly all its software-building tools available on GitHub, he said. “It’s a matter of building trust with developers,” said Friedman. “You earn the right to be considered for other things.”
Current GitHub chief Chris Wanstrath, who becomes a Microsoft ‘technical fellow’ with the takeover, reporting to Guthrie, said the same. “Their vision matches our own. We believe GitHub needs to remain an open platform for all developers. No matter your language, stack, platform, cloud, or license, GitHub will continue to be your home,” he commented.
If Microsoft does as it says and leaves the integral parts of the platform unchanged then developers will have no reason to move from it, rounded out Vernon. “GitHub is the best-known developer platform, which makes it easier for companies to bring new developers on board. There is also a disincentive to switching, as it will take time to coordinate transferring projects across to new services.”
He added: “GitHub could become a more attractive proposition to some IoT developers, as Microsoft is considered to be one of the leading companies in terms of researching automated reasoning and consequently software debugging. Microsoft could leverage its lead in these fields to improve the debugging functions in GitHub – which would certainly sweeten the deal for developers.”
