The recent acquisition of GitHub by the tech giant Microsoft (MSFT) for a whopping amount of $7.5B is raising a question to millions of people, why?
What is happening in the Silicon Valley and tech giants which are redefining the rules of business. Whether a company is good in financial gains or bad in gains, it seems does not matter to technology platforms.
To collaborate, there are two rules of the game:
- Financial Fit
- Strategic Fit
Everybody understands the concept of financially fit collaboration/acquisition. As if a company is making good revenue/profit and somehow the stakeholder understand the need and risks to expand would be proceeding to buy another company. However, strategically acquisition is a bit tricky in this situation.
There are many undocumented ways to identify the strategic need to collaborate or acquire another company. It becomes very prominent these days, especially top companies acquiring considerable smaller companies and also willing to pay whatever it cost in order to make deal a success.
Very important points to consider before identifying the need:
- Is the company from the same industry or different industry?
- Do I have the reach and capability to create similar services and offering?
- What are the barriers to entry to the platform?
- Is it profitable or not?
- How could I be able to leverage its services combined with my offerings?
- What if I don’t buy it, would my competitor will?
- How to tap into the market where my competitor is succeeding. Would this acquisition help?
After understanding the need, there comes the evaluation part which answers many questions such as for what amount, how much stake, what type of control?
Microsoft also has its cloud business as Microsoft Azure which is having pretty tough time competing with Amazon Web Services (AWS) where GitHub is the top used platform for developers and businesses. More than 1.8 million businesses and organizations use GitHub which allows its users to share their code, maintain coding repository and versions, collaborate with teams and create amazing products.
This could be Microsoft’s strategic decision to prepare itself for future of work by leveraging its various developer services and to take on Amazon.
Read what Satya Nadella, CEO Microsoft has to say Microsoft + GitHub = Empowering Developers
Last Minute Thoughts:
For tech companies, innovation, consistency, and platforms are the key evaluator. The kind of audience follow it and how rigorously follow it, is the deciding factor for dependency. GitHub, in this case, is an ocean of developers with a huge volume of coding data and developer’s approach, trends. Since we are moving in the era of artificial intelligence and big data analytics, it will also act as a feeding system to those big capability machines.
Rest, let us leave it to Microsoft to decide the better usage of GitHub’s application with its existing system, to me, it’s beyond commercialization.