Open-Source ‘Great Satan’ No More, Microsoft Wins Over Skeptics

(Bloomberg) --

In 2014, Microsoft Corp. cloud chief Scott Guthrie wrote up a proposal to acquire GitHub Inc. Then he filed the plan away in a drawer. Every once in a while he'd take the plan out and look at it, and then return it to the cabinet.

Guthrie felt Microsoft just wasn't ready to acquire the popular open-source company -- a widely used digital hive where millions of software programmers collaborate on, share and store code. “We would have screwed it up,” Guthrie said. What’s more, developers – many of whom viewed Microsoft as public enemy No. 1 for its attacks on freely distributed open-source software – would have rioted.  

"The open-source world would’ve rightly looked at us at the time as the antichrist," he said. "We didn’t have the credibility that we have now around open source." The company was still largely focused on its own software, completely created in-house and owned by Microsoft.

Since then, Microsoft has turned itself into one of the biggest developers of open-source software and has persuaded customers to trust applications built using rival tools and programs to Microsoft's Azure cloud-computing service, boosting Azure revenue and usage. More than 60 percent of the company’s team that works with cloud-app developers were hired for their expertise in non-Microsoft programming tools or cloud services. A full version of the open-source Linux operating system is even being added to Windows. The efforts are bringing new software builders to the Microsoft camp. 

Last June, Guthrie and Microsoft Chief Executive Officer Satya Nadella finally unveiled an agreement to acquire GitHub. While there was still some initial agita in the developer community and rivals gained some refugee users from GitHub, one year later the deal is noteworthy mainly for how little drama it's caused. Most GitHub users just continued putting their code there.

“Some people were upset, but few, because Microsoft had spent years building up goodwill with the open-source community,” said Matt Asay, an Adobe Inc. senior director who is a longtime open-source developer and previous Microsoft opponent. “There was a knee-jerk sort of ‘remember, they're the Great Satan’ reaction, but it was halfhearted.”

Appealing to a wider swath of developers is important for Microsoft’s growth prospects. Tools and software that help engineers write programs generate a small portion of Microsoft’s revenue, dwarfed by units like cloud services and Windows – but they lure users to the bigger businesses. Winning over software developers is key to getting them to write apps from games to business software that dovetail with Microsoft products or that are housed in Microsoft’s Azure cloud. Developers’ hearts and minds have also been key to Microsoft’s revived reputation as a technology leader. 

“There are more developers today that Microsoft is being relevant to,” said S. Somasegar, managing director at Madrona Venture Group who spent 27 years at Microsoft, including running the developer division when it began increasing its focus on open source.

Five years ago, the company was far more insular. When Nadella took over as CEO in 2014, more than a decade of developer defections had left the company in a weak position. Microsoft had been unable to rally engineers to build apps for its phones and tablets. The biggest startups were built on open-source tools, and growing young companies like Uber Technologies Inc. and Airbnb Inc. chose Amazon.com Inc.’s cloud.

The mass defection of software developers represented a dramatic reversal of fortune for a company that was founded in 1975 as a developer tools company – Bill Gates and Paul Allen’s first products were languages meant to enable coders to program early home computers. Later on, the Windows operating system’s dominance meant everyone wrote programs for it. But even as video surfaced in the early 2000s of then-CEO Steve Ballmer working up a sweat onstage cheering for “developers,” the company was losing them in droves. The rise of internet-based computing and later mobile phones pushed programmers to other languages and mobile app stores. Microsoft executives termed the increasingly popular Linux and open-source tools a “cancer” and an anathema to the “American Way,” angering an entire community of engineers, including people like Asay.

 “Our investments were really Windows-only,” said Julia Liuson, who runs Microsoft’s Visual Studio products, which are used to develop software, applications and web sites. By 2012, developers told her they no longer looked to Microsoft to provide them with programming languages and end tools. “You got this really clear sense that we were their past but not part of their future.”

After Nadella replaced Ballmer, Microsoft began releasing some key products  – including one of Liuson’s Visual Studio programs – under an open-source license, so any programmer could use and make adjustments to it. Nadella also wanted to boost Azure usage by recruiting Linux devotees. They weren’t in a forgiving mood. Microsoft engineers frequently found themselves unwelcome at the table – literally. Liuson sent a delegation to a Linux conference a few years ago. When they sat down at the lunch tables, existing occupants scattered at the sight of their Microsoft badges, she said.

Microsoft tried to reboot the entire way it works with developers, starting with a basic but arcane part of the relationship -- the reams of highly technical articles about products, which include sample code and blueprints for interested engineers. To overhaul these instruction manual-type documents, Guthrie brought back Microsoft veteran Jeff Sandquist, who had started his career in 1997 on the company’s telephone support hotline for software developers and decamped for Twitter Inc. in 2013. Upon his return, Sandquist worked to make the articles fresher and more accurate, with more technical depth. He bolstered Microsoft's ability to write documentation for developers working with Java, Python and Linux – all of which had gained prominence as Microsoft’s tools faded. Without clear and compelling documentation for a wider array of systems, Microsoft couldn’t hope to gain credibility with developers, Sandquist said. 

Next, Sandquist began to set up a team of experts who could reach out directly to cloud-app developers to get them to reconsider Microsoft. The company has always reached out to developers, but this time, in a Microsoft now embracing open source and trying to lure a wide array of engineers to use Azure, Sandquist’s new team would have to include top experts spanning the full range of non-Microsoft technologies.

“We hired a number of people where the first day they were using Azure was probably their second day at Microsoft,” said Sandquist, who is now general manager for developer relations.

Sandquist aimed to create a diverse team in several respects: expertise, gender, race and location – unlike many other technical teams, much of it is based outside the company’s headquarters in Redmond, Washington. He hired people like Emily Freeman, a Washington-based ghostwriter for tech entrepreneurs, who underwent a “slightly more than quarter-life crisis” and switched to coding despite having no prior programming experience. With a baby daughter, she moved to Denver and learned the web application framework Ruby on Rails, ending up as a developer-relations expert. The role let her blend newly gained coding skills with her older talent for communication, she said, providing technical information to developers, answering their questions and relaying their needs and concerns back to her employer. 

About two years ago she heard Microsoft was looking for people like her for its cloud advocacy team – experts in areas outside its core.

“Developers are skeptics by nature – the majority of people have started to take notice, but a lot of people are still in that phase where they still want a little more proof,” she said. 

Some customers are talking notice. Adobe, where Asay works, is an Azure customer that uses Java and Red Hat Linux. So is Maersk, the shipping giant. Carlsberg, the beer maker, has some of its Azure applications running SUSE Linux, and the same goes for Coke One North America, which handles the technology for North American Coca-Cola bottlers. GitHub, which hosts code for companies large and small, will continue to be a barometer of developer feelings about its parent company.

Since Microsoft’s deal for GitHub, other tech giants have also sought out ways to get closer to the open source community's roots. When International Business Machines Corp. agreed to buy Linux developer Red Hat Inc. for $33 billion last year, it raised some similar concerns for developers, even though IBM has been working on Linux projects for two decades. In announcing the acquisition, IBM took pains to assure developers that it would remain committed to Red Hat's open-source work.

So far, Microsoft has done little to interfere with GitHub. Like Microsoft acquisition LinkedIn, GitHub has its own CEO and is run independently. The prevailing management ethos seems to be to try to add features users appreciate – for example, making some private code repositories free to host – while not messing with anything they did like.  Last week, GitHub announced a system that lets people fund their favorite GitHub contributors – a sort of Patreon for coders. 

Friedman has instructed his team that the needs of GitHub customers come first, even if they conflict with Microsoft's desire to promote its other products. In November, Friedman went to his first AWS re:Invent, the flagship cloud conference of Microsoft’s biggest rival Amazon, to sit alongside Amazon cloud officials and meet with joint customers. He’s also inked a closer deal with Google Cloud. Still, Rivals GitLab and Bitbucket, owned by Altassian Corp., say many GitHub users have decamped for their sites: Bitbucket said the day after the Microsoft deal was announced was its biggest signup day ever, while GitLab says it gained about 113,000 code repositories that were moved from GitHub.

GitHub CEO Friedman says his company has grown, too. In almost 12 months since Microsoft’s purchase of the site was announced, the number of registered developers that called the site home has risen to 36 million from 28 million. 

There are customers who worry that, over time, GitHub will slip more into Microsoft's shadow.  Reza Zadeh, CEO of Matroid, an artificial intelligence company that competes with Microsoft, is still happily using GitHub – but Microsoft’s ownership does make him a little uneasy. He assumes in the future GitHub will be somewhat more aggressive about encouraging users to choose Azure.

GitHub will have to fight that tendency, CEO Friedman said.

“GitHub has to be neutral and GitHub has to be independent,” he said. “Developers want choice. GitHub can’t have any favoritism.”