New Relic Acquires Codestream & Partners with Microsoft

New Relic Acquires CodeStream to Enhance Developer-Operations Collaboration

New Relic, a leading observability platform, has recently completed an acquisition and is simultaneously introducing a new service. This strategic move aims to strengthen the connection between developers and operations teams.

The acquisition centers around CodeStream, an application designed to function directly within integrated development environments (IDEs). It enables developers to exchange notes and insights related to code, directly alongside the code itself.

Integration with New Relic One and Microsoft

New Relic has already integrated CodeStream with New Relic One, its comprehensive full-stack data analysis platform. This platform encompasses metrics, events, and logs.

A new service, New Relic CodeStream, is being launched within New Relic One. Furthermore, a partnership with Microsoft has been established to integrate the new product into Microsoft’s IDEs and collaboration tools.

These include VS Code, Visual Studio, Teams, and GitHub, expanding the reach and usability of the combined offering.

Deal Details and CodeStream’s Background

The financial terms of the acquisition were not publicly disclosed, but were described as “competitive” by Peter Pezaris, co-founder and CEO of CodeStream.

CodeStream participated in the Y Combinator Winter 2018 cohort and had secured approximately $3 million in funding. It was utilized by tens of thousands of developers, including teams at prominent companies like Microsoft, Hearst, Atlassian, and Zenefits.

Comprehensive Feature Set

CodeStream already offered compatibility with Visual Studio and VS Code, alongside JetBrains. It also supported pull requests from GitHub, BitBucket, and GitLab.

Additionally, it provided issue management integration with Jira, Trello, Asana, and nine other platforms. Observability was supported through New Relic One and Pixie, and code discussion was integrated with Slack, MS Teams, email, and in-editor notifications.

All of these features will continue to be supported, with the Microsoft integrations becoming even more robust.

Customer Base and Market Trends

New Relic currently serves 14,100 customers. Prior to the acquisition, 750 customers were jointly utilizing both New Relic and CodeStream.

This acquisition highlights several key trends within the DevOps landscape. Notably, there is a growing trend of consolidation, with New Relic positioning itself as a comprehensive platform by expanding its functionality.

This move also addresses a potential challenge for CodeStream, as customers increasingly prefer integrated observability and communication solutions.

Strategic Alignment and Future Vision

“Working with New Relic was a natural fit due to the strong strategic alignment between our companies,” stated Pezaris in an interview with TechCrunch.

“Throughout my career, I’ve founded, built, and sold four companies, and in each instance, scaling within a larger organization has unlocked greater value. This is an exciting opportunity for us.”

Pezaris further emphasized the alignment of values and the potential to accelerate their mission by joining forces with New Relic, leveraging its resources, team, and customer base.

The CodeStream team was also impressed with the New Relic One platform and believes their solution will enhance developer experience by integrating telemetry data and observability directly within the IDE.

Collaboration as a Key Driver

CodeStream’s integration aligns with the increasing importance of collaboration in modern enterprise software.

Developers are often geographically dispersed and work across different time zones, necessitating improved communication methods for sharing insights and notes.

As previously noted regarding CodeStream’s integration with VS Code, applications are increasingly incorporating “conversation” channels for detailed discussions within the content creation process.

This reduces reliance on tools like Slack and provides a more tailored experience for users.

New Relic CodeStream: Features and Availability

New Relic CodeStream allows users to write notes directly within the code margins and create a stream that links chat notes to specific lines of code.

Interested parties can sign up for a free trial of New Relic One to explore the new service.

The Expanding DevOps Landscape

The acquisition also reflects the continued growth of DevOps as a critical category in enterprise software.

The shift towards larger projects, increased developer numbers, evolving IT architectures, and heightened security concerns has elevated the importance of developers within organizations.

This, in turn, has fueled demand for services catering to their needs.

New Relic cites estimates from Redpoint, indicating a total addressable market of $35 billion for the observability market, with double-digit annual growth.

A Data-Driven Future for Observability

“Developer workflows are the foundation of all modern companies, and observability as an engineering practice envisions a future where these workflows are powered by data, not just assumptions,” said New Relic CEO Bill Staples.

“To accelerate this shared mission of making observability a data-driven daily practice for every engineer, we are bringing production telemetry and collaboration tools to the IDE. By launching New Relic CodeStream and partnering with Microsoft, we aim to deliver a truly developer-centric experience to millions of developers across our communities.”

Strengthening the Developer-Operations Bridge

Buddy Brewer, GM of New Relic, emphasized that DevOps is fundamentally about improving orchestration between developers and operations teams.

“CodeStream stood out to us because they are the leading company focused on code collaboration for developers, dedicated to improving understanding and communication about code. With CodeStream, developers can discuss code directly within their development environment and create a referenceable, evolving knowledge base.

Currently, developers often resort to copy/pasting code snippets into chat applications like Slack or Teams, which creates friction and delays.

Microsoft’s Perspective and Future Implications

This collaboration also explains Microsoft’s involvement, although it raises the question of whether Microsoft will pursue more direct involvement in developer services in the future.

“Developers are essential to helping organizations in every industry accelerate the adoption of new capabilities. Our goal at Microsoft is to provide a comprehensive range of services to meet the real-world needs of our customers,” said Scott Guthrie, executive vice president, Cloud + AI, Microsoft.

“We are excited to see comprehensive integration support with New Relic CodeStream, spanning multiple Microsoft platforms and products, including VS Code, Visual Studio, .NET, GitHub, Microsoft Teams, and Azure DevOps. This integration will enhance collaboration between development projects and improve connections between existing applications, benefiting the developer community.”

Update: To clarify a previous report, New Relic has 14,100 customers, while New Relic and CodeStream shared 750 joint customers prior to the acquisition.