Acquiring GitHub is a master stroke by Satya Nadela to make up ground between Microsoft Azure and Amazon Web Services (AWS).
AWS has the lion’s share of the cloud services business. In Q1 of 2018, AWS recorded a revenue of $5.44Bn and Microsoft Cloud Services recorded $1.9Bn*.
Amongst many plans that Microsoft may have for GitHub, the obvious one is Functional Integration with Azure. Functional Integration is the process in which you combine two or more services to provide an integrated experience for the end customer. Apple does this very well with iTunes. An Apple customer using an iPad, iPhone and Macbook can keep their music library in sync across devices - that’s Functional Integration.
We use the Functional Integration strategy at Richpanel for everything we do. We started off as a Customer Data Platform that helps businesses to connect customer data silos. We later built a help desk that is integrated with the main platform so agents have all context while assisting the customer.
By integrating GitHub with Azure, Microsoft could allow developers to manage the whole pipeline - from writing code, to provisioning hardware to deployment. This can be done today by using 3rd party plugins but is pretty complex. Microsoft can offer it as a core integration in GitHub. A simple button like ‘Deploy code to Azure’ inside GitHub could get a lot of new developers hooked onto Azure.
Another strategy is to create hurdles or ‘minor inconveniences’ to deploy to AWS. Unethical but tech companies do this to each other everyday. I have many examples - maybe a post for another time.
This strategy is analogous with Microsoft’s acquisition of Linkedin. Many CRM companies including Salesforce.com rely on Linkedin to keep contact info up to date. By acquiring the data source itself, Microsoft can make it expensive for other CRM’s to access contact info and give an unfair advantage to Microsoft Dynamics CRM. In fact, Salesforce filed a antitrust suit to stop Microsoft from acquiring Linkedin. Salesforce urges EU to block Microsoft's acquisition of LinkedIn
*Microsoft clod revenues include Azure and other cloud services like Office 365.
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