10 ms·

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 h

by 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.
      - simonh 8y ago
        The profit margin on most consumer PCs is less than $20. https://www.theguardian.com/technology/2014/jan/09/pc-value-trap-windows-chrome-hp-dell-lenovo-asus-acer https://www.theguardian.com/technology/2014/jan/09/pc-value-... Look at the 4th chart down. That's a bit out of date, but current figures aren't going to be dramatically better, and look at the trend line.
        heavenlyblue 8y ago
        Yeah, but Chrome OS is also developed by Google - a revenue-seeking company. So you're either missing the point where the margins on the laptops are already including the cost of the OEM OS priced at an even lower price than a personal OEM license, or you're missing the point where the OS being free also includes your annual usage of Google services.
        simonh 8y ago
        I’m not sure I’m following you. Bottom line is, if a consumer purchasing a laptop doesn’t care about Windows apps, two very similar laptops one running Windows and the other $20 cheaper running ChromeOS is not a good situation for Microsoft. No matter what Googoe’s revenue model is.
        heavenlyblue 8y ago
        Well, I don't see any features of Windows that make it inherently not-free. So what's the catch here? I think people who are selling Windows believe they can milk that cow for some time, still. During that time they can push on the software development tools/environment; and frankly they have always been better at that. Business logic is better done by business people and no matter how hard an average software developer is going to push against that - that's the truth. Who do you think is going to acquire AirTable or alike? I could see Microsoft being incredibly interested in that opportunity.
  - Eridrus 8y ago
    MS definitely doesn't want it. ChromeOS has already won in terms of device administration, because simpler devices are easier to administer, less prone to malware, etc. If native apps, e.g. Office, really get replaced by web apps, it's going to be all over for Windows as a profit center, and Windows will be hamstrung by it's legacy customers from embracing simpler ideas.
    - pjmlp 8y ago
      ChromeOS is no where to be seen in Europe, that doesn't sound like a victory to me.
zaat 8y ago
> Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. At first I thought the same way, but then I started wondering if those users are really meaningful users. Isn't most of the new developer products are either mobile apps or SaaS solutions, leaving aside monsters like adobe? If so, does it really matters that so many users are using windows if they consume apps mainly with their (probably, chrome) browser?
- lev99 8y ago
  > If so, does it really matters that so many users are using windows if they consume apps mainly with their (probably, chrome) browser? Windows is monetizing Telemetry data, which does have meaning and value, even for people that never leave chrome.
  - mastax 8y ago
    [citation needed]
  - zaat 8y ago
    As far as we, the general public, know for certain, telemetry is used to gather usability and preferences data, and bugs. You can avoid using their software if you are concerned about your privacy, that's totally legitimate, You can also warn others about it, if you wish so and believe that it is an important cause. I'll walk most of that walk with you. But I believe you have no justification for your accusation.
    - lev99 8y ago
      https://arstechnica.com/information-technology/2017/04/microsoft-opens-up-on-windows-telemetry-tells-us-most-of-what-data-it-collects/ https://arstechnica.com/information-technology/2017/04/micro... This suggests it is used for advertisements.
ealexhudson 8y ago
Github would have had trouble getting more VC investment. According to Bloomberg, there are ~21M software developers in the world, and Github has ~24M user accounts. There's little userbase growth possible there; they would have had to start increasing revenue per user rapidly to be interesting for another VC round. Equally, on their $200M revenue (or whatever it was), they would struggle to get a multiple that would be interesting for their VC backers. Their market cap at IPO wouldn't have been much more than $1B (absent some growth story). It's a great problem to have, to be sure, but the MS purchase is a great deal for Github investors.
- rsp1984 8y ago
  They could have easily become a formidable competitor to Atlassian if they extended their offering beyond just code hosting. Competing with Atlassian is actually not that hard considering how bad Atlassian is at times (I'm a customer myself). Atlassian today has a market cap of 15B. There's a lot of growth opportunities if you have >20m users.
  - dd36 8y ago
    Agree. There are some easy project management wins for Github. It’s flabbergasting that they’ve ignored them. Issue complexity and time estimates. Burn downs. Github is only part way there, why not get all the way?
    - icc97 8y ago
      Sometimes it's worth it to stick to what you're good at. If Github burnt a ton of cash to try and compete with Jira, ended up making a product that didn't attract enough people over at the same time as ignoring problems that users were already grumbling about, this could have led to them being in a worse state and easier for MS to pick up on the cheap.
      - dd36 8y ago
        If it cost a ton of cash, that would be ridiculous. It is adding some fields and charts. Do you think Zenhub has or had a ton of cash?
scarface74 8y ago
Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. In the grand scheme of things. No one cares about desktop development. Walk into a VCs office and tell them that you have the next great idea for a Windows app and watch how fast you get laughed out of the office. How many developers are going to flock to writing Windows apps? As much as I hate it, most of the popular desktop apps are written using cross platform toolkits like Electron. The only companies making serious money on the desktop are Microsoft and Adobe. Games don't count as "desktop apps". They are mostly using cross platform game engines and not dependent on being part of the Windows desktop. As far as IPOing, if they couldn't make money as a public company, they would have been an acquisition target either way.
- AnIdiotOnTheNet 8y ago
  > In the grand scheme of things. No one cares about desktop development. Maybe no one in reality-distortion field of SV cares about Desktop, but offices are full of them and they're still running regular old desktop applications to do real work.
  - scarface74 8y ago
    What are those regular old desktop apps? Apps built by Microsoft, Adobe, and a few other large companies. The bespoke internal business apps have been moving to the web for decades.
    - AnIdiotOnTheNet 8y ago
      I think you'd be surprised how few companies that aren't SV startups actually give a damn about the cloud. "Oh, you want to charge me a subscription to use software I already own and host all my data and critical infrastructure somewhere where I don't have direct control over it? And it costs more? Where do I sign up!?"
      - scarface74 8y ago
alter_eco123 8y ago
> Seriously? GitHub could have easily gone out for more VC. Making it as an independent company generally involves not taking on more debt on top of a massive pile of debt. What's necessary is, you know, profits and stuff.
- icedchai 8y ago
  1) Equity isn't debt. 2) Profits? You must be kidding. Take a look at some SaaS companies that have gone public in the last 5 years. Few are profitable. It's all about growth of revenue. The profits are way down the line.
  - alter_eco123 8y ago
    > Take a look at some SaaS companies that have gone public in the last 5 years. Few are profitable. It's all about growth of revenue. Who's kidding? I doubt you genuinely believe we've reached a new paradigm where bankruptcy is no longer a thing.
    - icedchai 8y ago
      Correct. I don’t believe most of these businesses are viable long term. But that hasn’t kept me from profiting on the stocks...
      - alter_eco123 8y ago
        Good for you. But you were ostensibly addressing the idea of making it as an independent company - not whether and when revenues and profits might suddenly matter again.
        icedchai 8y ago
        I believe that Github could've done their own IPO at some point. They could've "made it" as an independent company, in that respect, without profits...
hoorayimhelping 8y ago
>Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. I thought that was addressed with this line: >Windows remains an important platform in the enterprise and for gaming (although Steam, much to Microsoft’s chagrin, takes a good amount of the platform profit there), but the company has no platform presence in mobile, and is in second place in the cloud. The 90% of users are largely enterprise (who don't go out and buy software on a whim) and Steam customers. Anecdotal, but the only reason I still have a personal Windows machine is to access my huge Steam library. I think a lot of gamers are in a similar situation. If my entire library worked on another platform (and all my preferred hardware), I would have very little reason to stay on Windows.

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.
    - simonh 8y ago
      The profit margin on most consumer PCs is less than $20. https://www.theguardian.com/technology/2014/jan/09/pc-value-trap-windows-chrome-hp-dell-lenovo-asus-acer https://www.theguardian.com/technology/2014/jan/09/pc-value-... Look at the 4th chart down. That's a bit out of date, but current figures aren't going to be dramatically better, and look at the trend line.
      - heavenlyblue 8y ago
        Yeah, but Chrome OS is also developed by Google - a revenue-seeking company. So you're either missing the point where the margins on the laptops are already including the cost of the OEM OS priced at an even lower price than a personal OEM license, or you're missing the point where the OS being free also includes your annual usage of Google services.
        simonh 8y ago
        I’m not sure I’m following you. Bottom line is, if a consumer purchasing a laptop doesn’t care about Windows apps, two very similar laptops one running Windows and the other $20 cheaper running ChromeOS is not a good situation for Microsoft. No matter what Googoe’s revenue model is.
        heavenlyblue 8y ago
        Well, I don't see any features of Windows that make it inherently not-free. So what's the catch here? I think people who are selling Windows believe they can milk that cow for some time, still. During that time they can push on the software development tools/environment; and frankly they have always been better at that. Business logic is better done by business people and no matter how hard an average software developer is going to push against that - that's the truth. Who do you think is going to acquire AirTable or alike? I could see Microsoft being incredibly interested in that opportunity.
- Eridrus 8y ago
  MS definitely doesn't want it. ChromeOS has already won in terms of device administration, because simpler devices are easier to administer, less prone to malware, etc. If native apps, e.g. Office, really get replaced by web apps, it's going to be all over for Windows as a profit center, and Windows will be hamstrung by it's legacy customers from embracing simpler ideas.
  - pjmlp 8y ago
    ChromeOS is no where to be seen in Europe, that doesn't sound like a victory to me.

zaat 8y ago

> Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. At first I thought the same way, but then I started wondering if those users are really meaningful users. Isn't most of the new developer products are either mobile apps or SaaS solutions, leaving aside monsters like adobe? If so, does it really matters that so many users are using windows if they consume apps mainly with their (probably, chrome) browser?

lev99 8y ago
> If so, does it really matters that so many users are using windows if they consume apps mainly with their (probably, chrome) browser? Windows is monetizing Telemetry data, which does have meaning and value, even for people that never leave chrome.
- mastax 8y ago
  [citation needed]
- zaat 8y ago
  As far as we, the general public, know for certain, telemetry is used to gather usability and preferences data, and bugs. You can avoid using their software if you are concerned about your privacy, that's totally legitimate, You can also warn others about it, if you wish so and believe that it is an important cause. I'll walk most of that walk with you. But I believe you have no justification for your accusation.
  - lev99 8y ago
    https://arstechnica.com/information-technology/2017/04/microsoft-opens-up-on-windows-telemetry-tells-us-most-of-what-data-it-collects/ https://arstechnica.com/information-technology/2017/04/micro... This suggests it is used for advertisements.

ealexhudson 8y ago

Github would have had trouble getting more VC investment. According to Bloomberg, there are ~21M software developers in the world, and Github has ~24M user accounts. There's little userbase growth possible there; they would have had to start increasing revenue per user rapidly to be interesting for another VC round. Equally, on their $200M revenue (or whatever it was), they would struggle to get a multiple that would be interesting for their VC backers. Their market cap at IPO wouldn't have been much more than $1B (absent some growth story). It's a great problem to have, to be sure, but the MS purchase is a great deal for Github investors.

rsp1984 8y ago
They could have easily become a formidable competitor to Atlassian if they extended their offering beyond just code hosting. Competing with Atlassian is actually not that hard considering how bad Atlassian is at times (I'm a customer myself). Atlassian today has a market cap of 15B. There's a lot of growth opportunities if you have >20m users.
- dd36 8y ago
  Agree. There are some easy project management wins for Github. It’s flabbergasting that they’ve ignored them. Issue complexity and time estimates. Burn downs. Github is only part way there, why not get all the way?
  - icc97 8y ago
    Sometimes it's worth it to stick to what you're good at. If Github burnt a ton of cash to try and compete with Jira, ended up making a product that didn't attract enough people over at the same time as ignoring problems that users were already grumbling about, this could have led to them being in a worse state and easier for MS to pick up on the cheap.
    - dd36 8y ago
      If it cost a ton of cash, that would be ridiculous. It is adding some fields and charts. Do you think Zenhub has or had a ton of cash?

scarface74 8y ago

Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. In the grand scheme of things. No one cares about desktop development. Walk into a VCs office and tell them that you have the next great idea for a Windows app and watch how fast you get laughed out of the office. How many developers are going to flock to writing Windows apps? As much as I hate it, most of the popular desktop apps are written using cross platform toolkits like Electron. The only companies making serious money on the desktop are Microsoft and Adobe. Games don't count as "desktop apps". They are mostly using cross platform game engines and not dependent on being part of the Windows desktop. As far as IPOing, if they couldn't make money as a public company, they would have been an acquisition target either way.

AnIdiotOnTheNet 8y ago
> In the grand scheme of things. No one cares about desktop development. Maybe no one in reality-distortion field of SV cares about Desktop, but offices are full of them and they're still running regular old desktop applications to do real work.
- scarface74 8y ago
  What are those regular old desktop apps? Apps built by Microsoft, Adobe, and a few other large companies. The bespoke internal business apps have been moving to the web for decades.
  - AnIdiotOnTheNet 8y ago
    I think you'd be surprised how few companies that aren't SV startups actually give a damn about the cloud. "Oh, you want to charge me a subscription to use software I already own and host all my data and critical infrastructure somewhere where I don't have direct control over it? And it costs more? Where do I sign up!?"
    - scarface74 8y ago

alter_eco123 8y ago

> Seriously? GitHub could have easily gone out for more VC. Making it as an independent company generally involves not taking on more debt on top of a massive pile of debt. What's necessary is, you know, profits and stuff.

icedchai 8y ago
1) Equity isn't debt. 2) Profits? You must be kidding. Take a look at some SaaS companies that have gone public in the last 5 years. Few are profitable. It's all about growth of revenue. The profits are way down the line.
- alter_eco123 8y ago
  > Take a look at some SaaS companies that have gone public in the last 5 years. Few are profitable. It's all about growth of revenue. Who's kidding? I doubt you genuinely believe we've reached a new paradigm where bankruptcy is no longer a thing.
  - icedchai 8y ago
    Correct. I don’t believe most of these businesses are viable long term. But that hasn’t kept me from profiting on the stocks...
    - alter_eco123 8y ago
      Good for you. But you were ostensibly addressing the idea of making it as an independent company - not whether and when revenues and profits might suddenly matter again.
      - icedchai 8y ago
        I believe that Github could've done their own IPO at some point. They could've "made it" as an independent company, in that respect, without profits...

hoorayimhelping 8y ago

>Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. I thought that was addressed with this line: >Windows remains an important platform in the enterprise and for gaming (although Steam, much to Microsoft’s chagrin, takes a good amount of the platform profit there), but the company has no platform presence in mobile, and is in second place in the cloud. The 90% of users are largely enterprise (who don't go out and buy software on a whim) and Steam customers. Anecdotal, but the only reason I still have a personal Windows machine is to access my huge Steam library. I think a lot of gamers are in a similar situation. If my entire library worked on another platform (and all my preferred hardware), I would have very little reason to stay on Windows.