Microsoft’s adoption of Linux today is something that appeared to never be possible only a few years ago. It was not even twenty years ago when Steve Ballmer (CEO of Microsoft at the time) stated that “Linux is a cancer.” Now, fast forward to today and Linux is the #1 OS used in the Microsoft Azure cloud, and Microsoft is shipping the Linux kernel with the Windows Subsystem for Linux (WSL) 2. In addition to all the Linux love from Microsoft, they have even been embracing Open Source, including with the acquisition of GitHub and NPM. All of this growth towards Open Source and Linux has been under the leadership of the current Microsoft CEO, Satya Nadella, and has lead to tremendous growth of the Microsoft Azure cloud and massive increases in Microsoft stock over the last few years.

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Microsoft ♥ Linux – Source: Microsoft

Disclaimer: To be absolutely clear, Microsoft has not made any announcements regarding an acquisition of Canonical or Ubuntu. This article explores some of the reason why they might do so in the future, and predicts that it’s something that would makes sense for the company going forward. Only executives at Microsoft and Mark Shuttleworth really know if this is something that has actually been discussed or thought about. I do NOT have any insider information what so ever. Please leave a message in the comments telling me what you think about this idea. Thanks!

Should Microsoft Acquire Canonical / Ubuntu?

Sure, Microsoft could easily create their own Linux distribution; similarly to what Amazon has done. However, Ubuntu (made by Canonical) is already the most used Linux distribution within Microsoft Azure. Plus, Microsoft has had some close integration in the Windows Subsystem for Linux (WSL) for Windows 10 where even though other Linux distros are supported, it’s clear that Ubuntu is the preferred distribution to use with WSL. Due to this popularity of Ubuntu Linux on the Microsoft Azure cloud platform, and the tight integration using WSL with Windows 10; it really seems to make perfect sense that if Microsoft wanted their own Linux distribution for the Azure cloud and for Windows 10, Microsoft would choose to continue this relationship to the next level by acquiring the Canonical (the company that makes the Ubuntu Linux distribution.)

Microsoft has even started targeting Linux with it’s desktop software. The release of the Microsoft Teams desktop client application for Linux is the first Microsoft Office application released for Linux. With this release, Microsoft even stated that it’s the “first Microsoft 365 app coming to Linux”. Perhaps we’ll even see Microsoft Word, PowerPoint, and others come to run natively on Linux in the near future as well.

This growth of Linux adoption by Microsoft makes it seem that even though the Windows OS will be here for the foreseeable future, it’s becoming clearer that Linux taking over the server market may only be the beginning. Linux is creeping into our desktop and laptop machines slowly more and more. In the future, it may become the dominant operating system for all uses. After all, Linux is in most peoples pockets with Google’s Android OS too. Microsoft acquiring Canonical and Ubuntu may be the best way for Microsoft to stay relevant in the way of operating systems of the future; for both server and desktop use.

Microsoft acquiring Canonical and Ubuntu may be the best way for Microsoft to stay relevant in the way of operating systems of the future; for both server and desktop use.

Chris Pietschmann, Founder of Build5Nines.com

Microsoft has continued to invest very heavily in the enterprise and cloud space through Microsoft Azure, Internet of Things (IoT), and other investments. Acquiring Ubuntu, the most popular Linux distribution in the cloud and across the enterprise, may be the next best move to say relevant in the operating system space. Especially since Windows Server’s marketshare in the cloud (including Microsoft’s own Azure cloud) has been slowly decreasing in favor of Linux and most popularly Ubuntu.

Yes, on a related note, Microsoft has some big partnerships with Red Hat for using Red Hat Enterprise Linux (RHEL) in Microsoft Azure too. Ubuntu is not the only Linux distribution they’re working with, among others that are supported in Azure as well. However, these partnerships and support of many Linux distributions doesn’t need to really be affected by the acquisition of Ubuntu and Canonical. Those other distributions can still continue to be supported within Azure, so long as enterprises are still relying on them for their cloud-based systems. Although, an even tighter integration of Ubuntu with both Microsoft Azure and Windows 10 could help push forward greater innovations in the ability to run Linux server in the cloud, as well as integrating them into the traditionally Windows-focused networks most enterprises are running today.

It’s worth mentioning that the Linux uses by Microsoft mentioned in this article so far are not the only ventures into embracing Linux that Microsoft has done. They use Linux a lot themselves to host many Microsoft Azure services, contribute to the Linux kernel, use Linux for the Azure Sphere OS for IoT, support Linux for IoT Edge devices with Azure IoT Edge, and much more. This even includes the SONiC open source networking OS based on Linux that runs the switches that power Microsoft Azure’s datacenters. No matter what you think about Microsoft, they have very much become an Open Source and Linux company in recent years. Formally owning their own Linux distribution would take that to the next level, and really cement their position in the Linux space.

The world’s most popular operating system across public clouds and OpenStack clouds.

Source: Ubuntu.com

Will Mark Shuttleworth sell to Microsoft?

Canonical’s Ubuntu Linux is not just the most popular Linux distribution in Microsoft Azure. It is the most popular Linux distribution across all clouds, and is the most popular Linux distribution in use today. This is some massive success and the growth of Ubuntu and Canonical puts the company at the forefront of being an interesting acquisition target by companies like Microsoft.

Since Canonical is a privately owned company, they don’t have shares that can be bought up on the stock market for any kind of hostile take over. Plus, for this type of acquisition, Microsoft wouldn’t want to acquire the company that way anyway. As was done peacefully, and great for the community, Microsoft will need to come to some purchase agreement with Mark Shuttleworth, Canonical’s founder.

As a company, Canonical is small enough that Microsoft could easily afford to acquire it. According to Wikipedia, Canonical’s revenue in 2018 was approximately $110 million. I don’t know what the actual acquisition price would be, but it’s likely it would take the form of a combination of cash and Microsoft stock in the realm of somewhere between $770 million and $3.3 billion. Although, given the popularity of Ubuntu, the company is most likely work many times this amount. In reality we could be looking at something more like a $30 billion acquisition.

My estimates of an acquisition price of between $770 million and $3.3 billion are based on the acquisitions of GitHub and LinkedIn. Microsoft acquired LinkedIn at $26 billion which is roughly 7.2x it’s annual revenue at the time. And, Microsoft acquired GitHub at $7.5 billion which is roughly 30x it’s annual revenue at the time. Without knowing more about the finances of Canonical, its seems to reason the acquisition price will be somewhere in the realm of these numbers.

Could Microsoft purchase Canonical for somewhere in between $770 million and $3.3 billion, or more?! Maybe much more is likely given the popularity of Ubuntu, so we could be looking at an acquisition upwards of $30 billion!

Chris Pietschmann, Found or Build5Nines.com

Reportedly, Mark Shuttleworth would consider selling Canonical if he were to remain in charge of the company after the acquisition. However, I don’t think a simple acquisition and leave the company “as-is” would be an acquisition Microsoft would be looking to do. Microsoft would likely replace Mark Shuttleworth as CEO. Although, this wouldn’t be a bad thing as I could see Mark’s new role being much more impactful and instrumental in Microsoft growth and future trajectory with Linux. While not running Canonical anymore as CEO, Mark would likely be in charge of Linux at Microsoft. This would probably mean steering Ubuntu innovations, along with Microsoft’s other Linux work such as contributing to the kernel, integration of Linux in Windows 10 WSL, and many other areas across using Linux within Microsoft Azure. This really wouldn’t be just an acquisition of Canonical and Ubuntu, but also an acquisition of the innovative Linux leadership provided by Mark Shuttleworth himself.

Perhaps, Mark and Microsoft could come to an agreement for acquiring Canonical that is much more that just about the purchase price. Also, if you look at the growth and investment Microsoft has been making since the acquisition of GitHub, it makes sense that Microsoft would do the same level of investment in Ubuntu as well; if not more.

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Linux is most used OS in Microsoft Azure

What do you think? Should Microsoft acquire Canonical?

If you agree of disagree with the idea that Microsoft should acquire Canonical and the Ubuntu Linux distribution, please leave a comment below. I would love to hear your take on this. Thanks!

Microsoft MVP

Chris Pietschmann is a Microsoft MVP, HashiCorp Ambassador, and Microsoft Certified Trainer (MCT) with 20+ years of experience designing and building Cloud & Enterprise systems. He has worked with companies of all sizes from startups to large enterprises. He has a passion for technology and sharing what he learns with others to help enable them to learn faster and be more productive.
HashiCorp Ambassador Microsoft Certified Trainer (MCT) Microsoft Certified: Azure Solutions Architect