Tuesday, June 05, 2018

Microsoft aim at undercutting AWS strategic advantage with its Github acquisition

Microsoft acquired Github code sharing platform. This is a brilliant move. It allows Microsoft to offset some of the insane advantages that AWS gained over the last couple of year via its innovate, leverage, commoditise strategy

ILC model by Simon Wardley

ILC relies on the following mechanisms: the larger the ecosystem, the higher the economy of scale, the more users, the more products being built on to of it, and the more data gathered. AWS continuously use this data trove to identify patterns and apply it to determine what feature they are going to build and commoditise next.  The end goal is to offer more industrialised components to make the entire AWS offer even more attractive. It's a virtuous circle, even if sometimes AWS cannibalise existing customer product and market share on the way. Effectively, AWS customers are AWS R&D department that feedback information into the ecosystem. 
As a result, AWS methodically eat away at the stack by standardising and industrialising components built on top of their existing offer. It further stabilises the ecosystem and enables them to tap further into the higher level of the IT value chain. As a result, AWS can reach more people while organically growing their offer at blazing speed with minimal risk. Because, apparently, all these startups are taking all the risks instead of AWS. 

How does Microsoft acquisition play into this?  Well, Microsoft with its Azure platform is executing a similar play to the one that AWS is delivering. However, Microsoft has a massive gap to bridge to catch up to AWS. And the difference is widening at incredible speed as the economy of scale offers an exponential advantage. AWS has a significant head start in the ILC game, which confers them a massive data collection advantage over its competitor. However, Microsoft can hope to bridge that gap by directly undercutting AWS and instantly tap into the information pipeline coming from GitHub. By doing so, Microsoft can combine the information coming from its Azure platform with Github. Providing them with an invaluable insight that combines actual component usage and developers interest and use. Moreover, this will also offer valuable insight into AWS, and other cloud platforms as a majority of projects ( opensource or not) deploying onto these are hosted on Github.
Cloud Wardley Map with Github position

I quickly drew the Wardley map above to demonstrate how smart the acquisition of Github is. You can clearly see how the code sharing platform enables Microsoft to undercut AWS strategic advantage by gaining ecosystem information straight from the developers and the platforms above.  As Ballmer once yelled: Developers, developers, developers!