15 ms·

The Cost of Developers

397 points by djug 8y ago

future1979 8y ago
The purchase of github doesn't make immediate financial sense to me. This article posted a reason - to stave off Windows decline. While it is plausible, I still don't see it.
- tr33house 8y ago
  Same here. I think there's another reason that's not so apparent
  - deltron3030 8y ago
    Cultural reasons maybe. The Ruby/Rails community Github is also part of fits into the overall strategy of cultural change towards a more design and UX centric brand, that is recognized and respected by other designers beyond being just a tool for CAD modeling.
    - brutus1213 8y ago
      Here is what I don't get. It is far easier for github's dev community to move to an alternate than Facebook users. Unless there is revenue to back it up, I don't understand the 7.5 Billion price tag. Heck .. Docker for 10 Billion might have been plausible. What are the barriers to another entrant? This acquisition reminds me of the Minecraft acquisition. It did not make financial sense to me either. If Nadella keeps this up, he will eventually have issues with shareholders.
      - scarface74 8y ago
        This acquisition was essential free. This time, really, the profits don’t matter: Microsoft is paying by issuing about 73 million new shares of stock, which cost it nothing. (It’s a tiny dilution, given the company’s 7.7 billion shares outstanding; what’s more, the share price rose on the news, which means that existing shareholders are happy to be diluted.) https://slate.com/business/2018/06/microsoft-github-deal-why-the-usd7-5-billion-purchase-price-makes-sense.html https://slate.com/business/2018/06/microsoft-github-deal-why...
        kgwgk 8y ago
        Using overvalued stock could make the acquisition “cheaper” than the sticker price (not really free). However, they’ve said they’ll do extraordinary buybacks to cancel the dilution in six months following the transaction. So unless the price of MSFT shares has a large correction during that period they are really going to spend over $7bn in cash.
        scarface74 8y ago
        Just to add to your response and making assumptions about how you came up with the $7 billion.... The new stock is about 1% of the total number of shares outstanding. Thier total market cap is around. $785 billion. If they did a stock buyback to cancel the dilution it would be 7.85 billion. My numbers are rounded - the new stock is actually less than 1% and the market cap as of right now is a little less than 785 billion so around 7 billion is more accurate.
        kgwgk 8y ago
        I just rounded down (to give a conservative estimate) the $7.5bn I've seen everywhere. If they are giving them new MSFT shares worth $7.5bn, buying those shares back would cost around $7.5bn assuming the price doesn't move. Of course it may be significantly more or less that depending on the evolution of the stock price. By the way, I said they will buy back stock in the next six months but it will be in the six months following the closing of the transaction (which is expected to take place by the end of the year). I've edited my previous comment slightly.
        endorphone 8y ago
        That seems like spurious logic, especially given that Microsoft has spent many, many billions of their cash hoard on a stock buyback program (as does Apple, etc). By the broken logic of that Slate article, they're throwing money down a well foolishly because shares outstanding are "free". Further, noting the current day price change is always the basis for countless nonsense articles. The shares haven't been diluted yet -- not until the deal closes later in the year -- and a temporary blip one way or another is close to meaningless.
      - oblio 8y ago
        He tripled the stock price. I doubt shareholders are sad :)
        endorphone 8y ago
        Brutus said eventually, and that's an entirely reasonable statement. Microsoft has burned many, many billions on foolish ventures to try to regain namespace, while at the same time the entirety of their revenue is still based on the coasting remains of the empire they built a decade ago. Microsoft's revenue has stagnated, despite endlessly acquiring and adding new verticals to the stack. To put it another way, simply doing the SAP and squeezing Windows + Office would have netted a much more profitable business than everything Microsoft has been doing.
        oblio 8y ago
        Azure is a new business.
        endorphone 8y ago
        Azure has negligible profit (if any), and it's profoundly telling that Microsoft always hogties Azure numbers with Windows Server sales. The press remarkably buys this hook line and sinker, repeats this Intelligent Cloud prattle as if it's true. [As an aside, Microsoft's continuing tendency to group success with losers, shuffling them around to opaque the numbers, is something that sees far less skepticism than it should. We saw this with Windows Mobile cum Phone where they tried to put on the face of success for as long as possible] Microsoft was traditionally a very high profit margin company, and their software offerings still are. Azure might sound good to make them seem like they're still with it, but it is deadly long term (massive capital expenses, fast depreciation, and very low margins).
  - deleted 8y ago
    [deleted]
- avip 8y ago
  Which MS acquisition did make sense? Skype? Nokia? LI? Yammer?
  - clbrook 8y ago
    Xamarin
    - evilmushroom 8y ago
      I have literally had a mobile team threaten to quit if we adopted Xamarin after they built a small app in it lol.
      - dagaci 8y ago
        Xamarin can be pretty tough if you don't have a good appreciation of Xcode, iOS and UWP development and tooling, and underlying differences.
        evilmushroom 8y ago
        Oh, they understood it, top tier mobile devs, they just thought it was trash. Drastically preferred to do native. I went to bat for them, and we shipped a beautiful app on time.
  - nickcox 8y ago
    aQuantive
    - scarface74 8y ago
      https://money.cnn.com/2012/07/02/technology/microsoft-aquantive/index.htm https://money.cnn.com/2012/07/02/technology/microsoft-aquant...
  - davidgay 8y ago
    https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History
- apapli 8y ago
  The reason? Simple. Developer mindshare. Microsoft lost it with Ballmer, and is getting it back under Satya. Ultimately Microsoft's success has always stemmed from providing platforms that support developers, and in turn they build great products people will pay for. And that drives Microsoft revenues, be it the OS, or nowadays, SaaS PaaS and IaaS (and OS).
  - JshWright 8y ago
    > Developer mindshare. Microsoft lost it with Ballmer When I think of Ballmer, the first word that comes mind is "developers" (it's also the second... and the third...)
    - chrisweekly 8y ago
      LOL Ditto. But. Being memorable for ridiculous antics doesn't quite translate into winning hearts and minds.
    - isostatic 8y ago
      I think of Donkey Kong shouting "Developers Developers Developers!" while throwing chairs rather than barrels
  - mariusmg 8y ago
    > Developer mindshare. Just have to point out how fucking expensive develope mindshare is then :) But seriously, from a business perspective buy GitHub (a company which gobbled up lots of VS money without a good business model) the acquisition doesn't makes any sense.
- nathankunicki 8y ago
  In my view it's a longer term proposition to gain more customers for Azure/Microsoft Cloud. Google, Microsoft, and Amazon all see the future of computing as being in the cloud. If Microsoft can integrate Azure and GitHub to make it easier for developers to deploy and run their code in the cloud, then that means more Azure customers. This likely means that GCP and AWS integrations will take second place.
  - pjmlp 8y ago
    They already do so. They had a joint presentation at BUILD 2018, how to have a full CI/CD pipeline in Azure, with code taken from Github. Now in retrospective, maybe the talks were already ongoing.
    - pythonaut_16 8y ago
      To be fair though, that sort of thing has already been very possible for anyone with the desire and engineering resources. The only thing those types of demonstrations and announcements tend to actually do is announce/release a tool that does most of the legwork for you.
  - chaosite 8y ago
    That doesn't make sense to me. GitHub integration is already pretty easy, the GitHub API is fine. Heroku for example is already pretty well integrated with GitHub, and they didn't have to buy anything.
    - ozim 8y ago
      Maybe you know next year it will by coincidence get harder to integrate with Heroku. If they would buy it, somehow it could get harder to integrate with Azure.
  - deleted 8y ago
    [deleted]
mgc092 8y ago
Great analysis, although I don't completely agree with this statement: "GitHub, a company that, having raised $350 million in venture capital, was not going to make it as an independent entity." If it is referring to the fact that, in the crazy VC spiral of the startups world, once you have received such a big investment, a sale to a big corp is the only choice, then I sadly agree. But GitHub could have been an independent entity with a sustainable business, if they had not fallen into VC's startups trap. I have to agree with DHH here: https://twitter.com/dhh/status/1003611913924894720 https://twitter.com/dhh/status/1003611913924894720. We need more independent software companies instead of only having 5 big players.
- sametmax 8y ago
  Yes but given the opportunity, between retiring early with hundred of millions and keeping working for a few millions, most people will choose the former.
- jillesvangurp 8y ago
  Correct, github sold out to investors, which then owned them, which then sold them out to get an exit when it turned out the company was in no shape for an IPO which is the only reasonable other exit if you are looking for a 10x ROI on a company that burned through hundreds of millions. Investors were in this for a huge exit and they just got it. In fairness, MS bought a valuable social network of essentially the entire OSS and developer community. As an independent entity, Github would have had to evolve in a very different way and gone more aggressively after making money, fixing their cost structure, like most of their competitors like Atlassian, Gitlab, and other companies selling developer tools as a SAAS service. So, even though these are comparable companies with comparable offerings, the value proposition is very different. There is no way in hell Gitlab is worth anywhere near what MS just paid for Github. Being based in silicon valley means Github paid a premium for being there and burned through loads of cash paying for expensive developers, fancy office space, etc. Much cheaper if you are based elsewhere, have less emphasis on wanting to have every OSS project on your platform and more emphasis on selling tools to corporations. This is in a nutshell the strategy for Atlassian and Gitlab. Both also offer freemium layers for OSS but mostly their deal is upselling to their paid offerings. Growth that way is much slower. Though, I would say, Gitlab is now pretty well positioned to succeed where Github struggled.
martin_drapeau 8y ago
The author talks about leverage an OS provides to the vendor: iOS for Apple (and its App Store) and Windows for Microsoft. It is only logical that when your leverage fades, you should find an alternative means for growth. Microsoft has been betting on the cloud for some time now. Part of that strategy is shifting enterprise from premise to Azure. In parallel investing in developers. VS Code, .NET Core and now GitHub are good examples of those investments. What I haven't seen are non-enterprise developers, even hobbyists, using Azure as their cloud. When I talk to fellow devs, they have experience with AWS not Azure. My impression is that the Linux/CLI environment is much more familiar that Azure cloud portal with buttons à la Windows. Less black box. Curious to know if my impression is right.
- cavisne 8y ago
  The hobbyiest/ side project angle of this is the most interesting to me. Most side projects end up in github at some point (especially if Microsoft makes private repos free - very likely). Azure’s PaaS offering is actually pretty good so having a simple deploy to azure button when creating the project could be a huge boost.
  - acdha 8y ago
    That’s my expectation, too: they don’t change anything except that there’ll be a super easy path to deploy on Azure and probably some nice CI tools, etc. with great VSCode integration. (“You have a Dockerfile. Click here to deploy on Azure free tier.”) Simply making sure they’re considered along with AWS would be big, especially since experience on small or side projects factors into many business decisions.
  - scarface74 8y ago
    Microsoft already has free private git repos, project management, hosted build servers for Windows, Linux,Macs, etc. It's been available with VSTS for years.
- zaat 8y ago
  Azure have support for every shell you want, the problem isn't there. My guesses are the late entry to the market, the widespread hatred to Microsoft (it's softening, but it's still there) and the half baked state of many of the services in the platform.
rsp1984 8y ago
There are times when I really like the thoughtful analysis on Stratechery and there are other times when I think it's a complete pile of detached-from-reality horsesh!t. Today is of the 2nd kind. What it also has is a potentially fatal weakness: no platform with user-based leverage. Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. This, by the way, is precisely why Microsoft is the best possible acquirer for GitHub, a company that, having raised $350 million in venture capital, was not going to make it as an independent entity. Seriously? GitHub could have easily gone out for more VC. They could have IPOed. "Not going to make it as an independent entity" is so far detached from reality, what was he thinking when writing that?
- martin_drapeau 8y ago
  Keep in mind that Windows as a platform is fading away. The Web with SaaS and is taking a lot of that. Even if they keep 90% of the desktop market, revenues are migrating to cloud and apps. MS doesn't want to end up with just an OS running a browser to access other things.
  - heavenlyblue 8y ago
    Does MS not actually want it or is it your thinking?
    - simonh 8y ago
      Oh, they really don't want that because it makes the OS valueless. If the only desktop app you're running is a browser, you might as well be using ChromeOS.
      - heavenlyblue 8y ago
        But it doesn't suddenly make Windows any less valuable than ChromeOS. Which means that under the assumption of 50% of the market still using Windows, they will continue using Windows. You may be drinking the kool-aid, but 90% of the market doesn't care. Windows costs $20 per device; ChromeOS has a non-zero cost either.
heydenberk 8y ago
> the App Store dramatically lowered the barriers to entry for developers Is there any platform with higher barriers to entry than the App Store? iOS development requires a proprietary toolchain only available on Apple hardware, programming languages hardly used elsewhere, not to mention the $99/year developer fee and the litany of vague and arbitrarily enforced rules and content guidelines for App Store release.
- whatshisface 8y ago
  Video game console development historically has often required thousands of dollars in special equipment and sometimes even a special relationship with the console manufacturer.
  - heydenberk 8y ago
    Good point. So if our point of comparison is video game consoles, the barriers to entry have indeed been lowered. But is that the right point of comparison?
    - scarface74 8y ago
      Before the App Store, you had to have relationships with each carrier to get on thier app stores or you could write independent apps but no one would find you. They also took a 70% cut - not a 30% cut.
      - simonh 8y ago
        It's worth bearing this in mind. Almost everyone expected the App Store fee to be 50%. Opening at 30% was considered stunningly low, to the point where it was almost considered unfair to other platform owners because it was felt Apple was subsidizing the system, taking profitability out of the App store business.
        antaviana 8y ago
        I remember reading in Steve Jobs biography book that he had the rule of making a 30% of sales in deals with third parties. Sometimes this was not remotely possible so in those cases the numbers had to be massaged so that he could see his 30% and approve the deal.
SideburnsOfDoom 8y ago
MS paid $7.5 Billion for Github, along with its 28 Million users - it's in the first paragraph of the announcement (1) That's around $268 per Github user. Now MS could have probably made a site comparable to Github for 0.1% of that cost - e.g. revive codeplex, pump a few million into the design, backend, git support and user interactions. But it wouldn't have 28M users. That's what they're paying for. That's the hard part. 1) https://news.microsoft.com/2018/06/04/microsoft-to-acquire-github-for-7-5-billion/ https://news.microsoft.com/2018/06/04/microsoft-to-acquire-g...
- pjc50 8y ago
  They did, it was called Visual Studio Team Services. https://blogs.msdn.microsoft.com/devops/2018/06/04/vsts-github/ https://blogs.msdn.microsoft.com/devops/2018/06/04/vsts-gith...
  - pythonaut_16 8y ago
    And it's awful. Not even comparable to Github and GitLab
    - rkeene2 8y ago
      I second this. I tried to use it when it was launched because it purported support for a build farm, but it was too terrible to figure out how to use it and I gave up after a couple of hours of trying to figure out how to make it do ANYTHING useful.
      - daok 8y ago
        You should give it back a try, they have been improved quite a lot since all these years.
        rkeene2 8y ago
        All these years being the 2 years since it was released ?
throwawayqdhd 8y ago
Solid analysis as always. As a Windows user, I'm finding it increasingly harder to justify using the OS. Pretty much every single software I use to get my work done works in my browser. The only software that runs natively is Ableton, which works perhaps even better on Mac. If I haven't switched, it's simply because of laziness: it would be too much of a hassle to copy all my samples to another device and reinstall all my plugins
- Mary-Jane 8y ago
  The bigger challenge, if you're a long time Windows user, will be overcoming your own muscle memory. Apple's keyboard layout and shortcuts are similar but different enough to cause problems. It can be quite distracting for instance if you're in the zone and hit the shortcut to replace some text, and then suddenly every window on your desktop disappears!
  - isostatic 8y ago
    Biggest problem I have with a mac is the " mark. On a PC (GB keyboard) it's shift-2, on a mac shift-2 is @, and " is shift-'
    - chillacy 8y ago
      You can customize your key mappings. I found a dvorak keyboard with esperanto key bindings on the internet. If that exists, I'm sure anything else can be done (assuming you touch type).
      - isostatic 8y ago
        Sure, but if you work from machine to machine to machine customisation is fairly terrible.
markm248 8y ago
I don't understand the last sentence: "That, though, is exactly why Microsoft had to pay so much: buying in directly is a whole lot more expensive than using leverage, which can produce equivalent — or better! — returns for much less investment."
- mattnewport 8y ago
  I think his point was that Apple has leverage over developers (you have to go through the app store to access iOS users) and therefore doesn't have to care about investing in a good developer experience. Microsoft doesn't have equivalent leverage to get developers to develop for Windows or Azure so they have to instead invest more in winning developers over by offering them better tools and services, hence the expensive GitHub acquisition.
mathattack 8y ago
Interesting to see Microsoft playing nice with vendors. I’ve seen many play less than nice. (ISVs who host on Azure and badmouth Microsoft products)
- themacguffinman 8y ago
  Woah I had no idea that when you use Azure, you're morally obligated to like the company too.
  - mathattack 8y ago
    If you’re in a partnership with them that both of you use as Marketing on your websites, you shouldn’t badmouth each other.
deleted 8y ago
[deleted]
nu-world-odor 8y ago
Hey! Where's the beef? Self-hosted GitBlit should be fine and not so amateurish horrific Rails distribution as Gitlab.
forgotAgain 8y ago
My experience is that developers are hardcore in their opinion on Microsoft: they are either all in or have no interest in dealing with them. I don't see Microsoft being able to move developers with this purchase.
- ascorbic 8y ago
  I'd imagine there are a significant number of developers using VS Code and no other Microsoft products.
test6554 8y ago
I thought Azure is the platform that Microsoft is planning to pull developers into? Step 1: Buy github Step 2: Integrate Azure and Visual Studio Step 3: Profit
IloveHN84 8y ago
Pretty Apple-oriented article. Sure, Apple has created a platform, but at which cost? You are obliged to develop for iOS, OSX only having an Apple computer. The platform has no escape rooms. Windows has extended the .Net to run even on Linux and you can build Windows applications from other OSes as well. The flexibility is in the tooling and MS knows it - see how dramatically improved Visual Studio in latest releases and now compare it with Xcode: what's new in Xcode 10? The Dark mode, what else? The author still forgets that actually the ultimate gaming platform is still a PC with Windows. Mobile gaming has improved, but the best gaming experience (VR and not) runs on bare metal PCs. Apple just decided to ditch OpenGL and OpenCL in favour of Metal - this will backfire in the near future, because developers look for easy tooling which allow them to use fewer but high quality APIs and not three thousands (e.g. Vulkan, UWP).

397 points by djug 8y ago

future1979 8y ago

The purchase of github doesn't make immediate financial sense to me. This article posted a reason - to stave off Windows decline. While it is plausible, I still don't see it.

tr33house 8y ago
Same here. I think there's another reason that's not so apparent
- deltron3030 8y ago
  Cultural reasons maybe. The Ruby/Rails community Github is also part of fits into the overall strategy of cultural change towards a more design and UX centric brand, that is recognized and respected by other designers beyond being just a tool for CAD modeling.
  - brutus1213 8y ago
    Here is what I don't get. It is far easier for github's dev community to move to an alternate than Facebook users. Unless there is revenue to back it up, I don't understand the 7.5 Billion price tag. Heck .. Docker for 10 Billion might have been plausible. What are the barriers to another entrant? This acquisition reminds me of the Minecraft acquisition. It did not make financial sense to me either. If Nadella keeps this up, he will eventually have issues with shareholders.
    - scarface74 8y ago
      This acquisition was essential free. This time, really, the profits don’t matter: Microsoft is paying by issuing about 73 million new shares of stock, which cost it nothing. (It’s a tiny dilution, given the company’s 7.7 billion shares outstanding; what’s more, the share price rose on the news, which means that existing shareholders are happy to be diluted.) https://slate.com/business/2018/06/microsoft-github-deal-why-the-usd7-5-billion-purchase-price-makes-sense.html https://slate.com/business/2018/06/microsoft-github-deal-why...
      - kgwgk 8y ago
        Using overvalued stock could make the acquisition “cheaper” than the sticker price (not really free). However, they’ve said they’ll do extraordinary buybacks to cancel the dilution in six months following the transaction. So unless the price of MSFT shares has a large correction during that period they are really going to spend over $7bn in cash.
        scarface74 8y ago
        Just to add to your response and making assumptions about how you came up with the $7 billion.... The new stock is about 1% of the total number of shares outstanding. Thier total market cap is around. $785 billion. If they did a stock buyback to cancel the dilution it would be 7.85 billion. My numbers are rounded - the new stock is actually less than 1% and the market cap as of right now is a little less than 785 billion so around 7 billion is more accurate.
        kgwgk 8y ago
        I just rounded down (to give a conservative estimate) the $7.5bn I've seen everywhere. If they are giving them new MSFT shares worth $7.5bn, buying those shares back would cost around $7.5bn assuming the price doesn't move. Of course it may be significantly more or less that depending on the evolution of the stock price. By the way, I said they will buy back stock in the next six months but it will be in the six months following the closing of the transaction (which is expected to take place by the end of the year). I've edited my previous comment slightly.
      - endorphone 8y ago
        That seems like spurious logic, especially given that Microsoft has spent many, many billions of their cash hoard on a stock buyback program (as does Apple, etc). By the broken logic of that Slate article, they're throwing money down a well foolishly because shares outstanding are "free". Further, noting the current day price change is always the basis for countless nonsense articles. The shares haven't been diluted yet -- not until the deal closes later in the year -- and a temporary blip one way or another is close to meaningless.
    - oblio 8y ago
      He tripled the stock price. I doubt shareholders are sad :)
      - endorphone 8y ago
        Brutus said eventually, and that's an entirely reasonable statement. Microsoft has burned many, many billions on foolish ventures to try to regain namespace, while at the same time the entirety of their revenue is still based on the coasting remains of the empire they built a decade ago. Microsoft's revenue has stagnated, despite endlessly acquiring and adding new verticals to the stack. To put it another way, simply doing the SAP and squeezing Windows + Office would have netted a much more profitable business than everything Microsoft has been doing.
        oblio 8y ago
        Azure is a new business.
        endorphone 8y ago
        Azure has negligible profit (if any), and it's profoundly telling that Microsoft always hogties Azure numbers with Windows Server sales. The press remarkably buys this hook line and sinker, repeats this Intelligent Cloud prattle as if it's true. [As an aside, Microsoft's continuing tendency to group success with losers, shuffling them around to opaque the numbers, is something that sees far less skepticism than it should. We saw this with Windows Mobile cum Phone where they tried to put on the face of success for as long as possible] Microsoft was traditionally a very high profit margin company, and their software offerings still are. Azure might sound good to make them seem like they're still with it, but it is deadly long term (massive capital expenses, fast depreciation, and very low margins).
- deleted 8y ago
  [deleted]
avip 8y ago
Which MS acquisition did make sense? Skype? Nokia? LI? Yammer?
- clbrook 8y ago
  Xamarin
  - evilmushroom 8y ago
    I have literally had a mobile team threaten to quit if we adopted Xamarin after they built a small app in it lol.
    - dagaci 8y ago
      Xamarin can be pretty tough if you don't have a good appreciation of Xcode, iOS and UWP development and tooling, and underlying differences.
      - evilmushroom 8y ago
        Oh, they understood it, top tier mobile devs, they just thought it was trash. Drastically preferred to do native. I went to bat for them, and we shipped a beautiful app on time.
- nickcox 8y ago
  aQuantive
  - scarface74 8y ago
    https://money.cnn.com/2012/07/02/technology/microsoft-aquantive/index.htm https://money.cnn.com/2012/07/02/technology/microsoft-aquant...
- davidgay 8y ago
  https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History
apapli 8y ago
The reason? Simple. Developer mindshare. Microsoft lost it with Ballmer, and is getting it back under Satya. Ultimately Microsoft's success has always stemmed from providing platforms that support developers, and in turn they build great products people will pay for. And that drives Microsoft revenues, be it the OS, or nowadays, SaaS PaaS and IaaS (and OS).
- JshWright 8y ago
  > Developer mindshare. Microsoft lost it with Ballmer When I think of Ballmer, the first word that comes mind is "developers" (it's also the second... and the third...)
  - chrisweekly 8y ago
    LOL Ditto. But. Being memorable for ridiculous antics doesn't quite translate into winning hearts and minds.
  - isostatic 8y ago
    I think of Donkey Kong shouting "Developers Developers Developers!" while throwing chairs rather than barrels
- mariusmg 8y ago
  > Developer mindshare. Just have to point out how fucking expensive develope mindshare is then :) But seriously, from a business perspective buy GitHub (a company which gobbled up lots of VS money without a good business model) the acquisition doesn't makes any sense.
nathankunicki 8y ago
In my view it's a longer term proposition to gain more customers for Azure/Microsoft Cloud. Google, Microsoft, and Amazon all see the future of computing as being in the cloud. If Microsoft can integrate Azure and GitHub to make it easier for developers to deploy and run their code in the cloud, then that means more Azure customers. This likely means that GCP and AWS integrations will take second place.
- pjmlp 8y ago
  They already do so. They had a joint presentation at BUILD 2018, how to have a full CI/CD pipeline in Azure, with code taken from Github. Now in retrospective, maybe the talks were already ongoing.
  - pythonaut_16 8y ago
    To be fair though, that sort of thing has already been very possible for anyone with the desire and engineering resources. The only thing those types of demonstrations and announcements tend to actually do is announce/release a tool that does most of the legwork for you.
- chaosite 8y ago
  That doesn't make sense to me. GitHub integration is already pretty easy, the GitHub API is fine. Heroku for example is already pretty well integrated with GitHub, and they didn't have to buy anything.
  - ozim 8y ago
    Maybe you know next year it will by coincidence get harder to integrate with Heroku. If they would buy it, somehow it could get harder to integrate with Azure.
- deleted 8y ago
  [deleted]

mgc092 8y ago

Great analysis, although I don't completely agree with this statement: "GitHub, a company that, having raised $350 million in venture capital, was not going to make it as an independent entity." If it is referring to the fact that, in the crazy VC spiral of the startups world, once you have received such a big investment, a sale to a big corp is the only choice, then I sadly agree. But GitHub could have been an independent entity with a sustainable business, if they had not fallen into VC's startups trap. I have to agree with DHH here: https://twitter.com/dhh/status/1003611913924894720 https://twitter.com/dhh/status/1003611913924894720. We need more independent software companies instead of only having 5 big players.

sametmax 8y ago
Yes but given the opportunity, between retiring early with hundred of millions and keeping working for a few millions, most people will choose the former.
jillesvangurp 8y ago
Correct, github sold out to investors, which then owned them, which then sold them out to get an exit when it turned out the company was in no shape for an IPO which is the only reasonable other exit if you are looking for a 10x ROI on a company that burned through hundreds of millions. Investors were in this for a huge exit and they just got it. In fairness, MS bought a valuable social network of essentially the entire OSS and developer community. As an independent entity, Github would have had to evolve in a very different way and gone more aggressively after making money, fixing their cost structure, like most of their competitors like Atlassian, Gitlab, and other companies selling developer tools as a SAAS service. So, even though these are comparable companies with comparable offerings, the value proposition is very different. There is no way in hell Gitlab is worth anywhere near what MS just paid for Github. Being based in silicon valley means Github paid a premium for being there and burned through loads of cash paying for expensive developers, fancy office space, etc. Much cheaper if you are based elsewhere, have less emphasis on wanting to have every OSS project on your platform and more emphasis on selling tools to corporations. This is in a nutshell the strategy for Atlassian and Gitlab. Both also offer freemium layers for OSS but mostly their deal is upselling to their paid offerings. Growth that way is much slower. Though, I would say, Gitlab is now pretty well positioned to succeed where Github struggled.

martin_drapeau 8y ago

The author talks about leverage an OS provides to the vendor: iOS for Apple (and its App Store) and Windows for Microsoft. It is only logical that when your leverage fades, you should find an alternative means for growth. Microsoft has been betting on the cloud for some time now. Part of that strategy is shifting enterprise from premise to Azure. In parallel investing in developers. VS Code, .NET Core and now GitHub are good examples of those investments. What I haven't seen are non-enterprise developers, even hobbyists, using Azure as their cloud. When I talk to fellow devs, they have experience with AWS not Azure. My impression is that the Linux/CLI environment is much more familiar that Azure cloud portal with buttons à la Windows. Less black box. Curious to know if my impression is right.

cavisne 8y ago
The hobbyiest/ side project angle of this is the most interesting to me. Most side projects end up in github at some point (especially if Microsoft makes private repos free - very likely). Azure’s PaaS offering is actually pretty good so having a simple deploy to azure button when creating the project could be a huge boost.
- acdha 8y ago
  That’s my expectation, too: they don’t change anything except that there’ll be a super easy path to deploy on Azure and probably some nice CI tools, etc. with great VSCode integration. (“You have a Dockerfile. Click here to deploy on Azure free tier.”) Simply making sure they’re considered along with AWS would be big, especially since experience on small or side projects factors into many business decisions.
- scarface74 8y ago
  Microsoft already has free private git repos, project management, hosted build servers for Windows, Linux,Macs, etc. It's been available with VSTS for years.
zaat 8y ago
Azure have support for every shell you want, the problem isn't there. My guesses are the late entry to the market, the widespread hatred to Microsoft (it's softening, but it's still there) and the half baked state of many of the services in the platform.

rsp1984 8y ago

There are times when I really like the thoughtful analysis on Stratechery and there are other times when I think it's a complete pile of detached-from-reality horsesh!t. Today is of the 2nd kind. What it also has is a potentially fatal weakness: no platform with user-based leverage. Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. This, by the way, is precisely why Microsoft is the best possible acquirer for GitHub, a company that, having raised $350 million in venture capital, was not going to make it as an independent entity. Seriously? GitHub could have easily gone out for more VC. They could have IPOed. "Not going to make it as an independent entity" is so far detached from reality, what was he thinking when writing that?

martin_drapeau 8y ago
Keep in mind that Windows as a platform is fading away. The Web with SaaS and is taking a lot of that. Even if they keep 90% of the desktop market, revenues are migrating to cloud and apps. MS doesn't want to end up with just an OS running a browser to access other things.
- heavenlyblue 8y ago
  Does MS not actually want it or is it your thinking?
  - simonh 8y ago
    Oh, they really don't want that because it makes the OS valueless. If the only desktop app you're running is a browser, you might as well be using ChromeOS.
    - heavenlyblue 8y ago
      But it doesn't suddenly make Windows any less valuable than ChromeOS. Which means that under the assumption of 50% of the market still using Windows, they will continue using Windows. You may be drinking the kool-aid, but 90% of the market doesn't care. Windows costs $20 per device; ChromeOS has a non-zero cost either.

heydenberk 8y ago

> the App Store dramatically lowered the barriers to entry for developers Is there any platform with higher barriers to entry than the App Store? iOS development requires a proprietary toolchain only available on Apple hardware, programming languages hardly used elsewhere, not to mention the $99/year developer fee and the litany of vague and arbitrarily enforced rules and content guidelines for App Store release.

whatshisface 8y ago
Video game console development historically has often required thousands of dollars in special equipment and sometimes even a special relationship with the console manufacturer.
- heydenberk 8y ago
  Good point. So if our point of comparison is video game consoles, the barriers to entry have indeed been lowered. But is that the right point of comparison?
  - scarface74 8y ago
    Before the App Store, you had to have relationships with each carrier to get on thier app stores or you could write independent apps but no one would find you. They also took a 70% cut - not a 30% cut.
    - simonh 8y ago
      It's worth bearing this in mind. Almost everyone expected the App Store fee to be 50%. Opening at 30% was considered stunningly low, to the point where it was almost considered unfair to other platform owners because it was felt Apple was subsidizing the system, taking profitability out of the App store business.
      - antaviana 8y ago
        I remember reading in Steve Jobs biography book that he had the rule of making a 30% of sales in deals with third parties. Sometimes this was not remotely possible so in those cases the numbers had to be massaged so that he could see his 30% and approve the deal.

SideburnsOfDoom 8y ago

MS paid $7.5 Billion for Github, along with its 28 Million users - it's in the first paragraph of the announcement (1) That's around $268 per Github user. Now MS could have probably made a site comparable to Github for 0.1% of that cost - e.g. revive codeplex, pump a few million into the design, backend, git support and user interactions. But it wouldn't have 28M users. That's what they're paying for. That's the hard part. 1) https://news.microsoft.com/2018/06/04/microsoft-to-acquire-github-for-7-5-billion/ https://news.microsoft.com/2018/06/04/microsoft-to-acquire-g...

pjc50 8y ago
They did, it was called Visual Studio Team Services. https://blogs.msdn.microsoft.com/devops/2018/06/04/vsts-github/ https://blogs.msdn.microsoft.com/devops/2018/06/04/vsts-gith...
- pythonaut_16 8y ago
  And it's awful. Not even comparable to Github and GitLab
  - rkeene2 8y ago
    I second this. I tried to use it when it was launched because it purported support for a build farm, but it was too terrible to figure out how to use it and I gave up after a couple of hours of trying to figure out how to make it do ANYTHING useful.
    - daok 8y ago
      You should give it back a try, they have been improved quite a lot since all these years.
      - rkeene2 8y ago
        All these years being the 2 years since it was released ?

throwawayqdhd 8y ago

Solid analysis as always. As a Windows user, I'm finding it increasingly harder to justify using the OS. Pretty much every single software I use to get my work done works in my browser. The only software that runs natively is Ableton, which works perhaps even better on Mac. If I haven't switched, it's simply because of laziness: it would be too much of a hassle to copy all my samples to another device and reinstall all my plugins

Mary-Jane 8y ago
The bigger challenge, if you're a long time Windows user, will be overcoming your own muscle memory. Apple's keyboard layout and shortcuts are similar but different enough to cause problems. It can be quite distracting for instance if you're in the zone and hit the shortcut to replace some text, and then suddenly every window on your desktop disappears!
- isostatic 8y ago
  Biggest problem I have with a mac is the " mark. On a PC (GB keyboard) it's shift-2, on a mac shift-2 is @, and " is shift-'
  - chillacy 8y ago
    You can customize your key mappings. I found a dvorak keyboard with esperanto key bindings on the internet. If that exists, I'm sure anything else can be done (assuming you touch type).
    - isostatic 8y ago
      Sure, but if you work from machine to machine to machine customisation is fairly terrible.

markm248 8y ago

I don't understand the last sentence: "That, though, is exactly why Microsoft had to pay so much: buying in directly is a whole lot more expensive than using leverage, which can produce equivalent — or better! — returns for much less investment."

mattnewport 8y ago
I think his point was that Apple has leverage over developers (you have to go through the app store to access iOS users) and therefore doesn't have to care about investing in a good developer experience. Microsoft doesn't have equivalent leverage to get developers to develop for Windows or Azure so they have to instead invest more in winning developers over by offering them better tools and services, hence the expensive GitHub acquisition.

mathattack 8y ago

Interesting to see Microsoft playing nice with vendors. I’ve seen many play less than nice. (ISVs who host on Azure and badmouth Microsoft products)

themacguffinman 8y ago
Woah I had no idea that when you use Azure, you're morally obligated to like the company too.
- mathattack 8y ago
  If you’re in a partnership with them that both of you use as Marketing on your websites, you shouldn’t badmouth each other.

deleted 8y ago

[deleted]

nu-world-odor 8y ago

Hey! Where's the beef? Self-hosted GitBlit should be fine and not so amateurish horrific Rails distribution as Gitlab.

forgotAgain 8y ago

My experience is that developers are hardcore in their opinion on Microsoft: they are either all in or have no interest in dealing with them. I don't see Microsoft being able to move developers with this purchase.

ascorbic 8y ago
I'd imagine there are a significant number of developers using VS Code and no other Microsoft products.

test6554 8y ago

I thought Azure is the platform that Microsoft is planning to pull developers into? Step 1: Buy github Step 2: Integrate Azure and Visual Studio Step 3: Profit

IloveHN84 8y ago

Pretty Apple-oriented article. Sure, Apple has created a platform, but at which cost? You are obliged to develop for iOS, OSX only having an Apple computer. The platform has no escape rooms. Windows has extended the .Net to run even on Linux and you can build Windows applications from other OSes as well. The flexibility is in the tooling and MS knows it - see how dramatically improved Visual Studio in latest releases and now compare it with Xcode: what's new in Xcode 10? The Dark mode, what else? The author still forgets that actually the ultimate gaming platform is still a PC with Windows. Mobile gaming has improved, but the best gaming experience (VR and not) runs on bare metal PCs. Apple just decided to ditch OpenGL and OpenCL in favour of Metal - this will backfire in the near future, because developers look for easy tooling which allow them to use fewer but high quality APIs and not three thousands (e.g. Vulkan, UWP).