Today on Slate.com
As for GitHub, it’s just the latest in a string of major Microsoft acquisitions (Skype, Minecraft, LinkedIn) that seek to move the company away from Windows and toward a much broader set of services for people using any kind of device. 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.)
GitHub is not being bought for its revenues, but rather for the promise (a promise not everyone is convinced can be realized) that it will be able to turn Microsoft into an even more developer-friendly place than it already is. No more will GitHub’s managers need to worry about how their new CEO is going to lead them to profitability. Instead, they can concentrate on simply providing the very best service to their customers, who will end up spending dozens of hours a month inside the Microsoft ecosystem. For the Redmond, Washington, giant, that’s priceless—and all at a price much less than it would cost to, say, buy Red Hat, another open-source darling that currently has a market capitalization north of $30 billion.