Welcome to Runtime! Today: Visual Studio Code fueled Microsoft's decade-long enterprise winning streak, but new challenges loom, why Google and Microsoft are forcing you to use their AI tools, and the latest enterprise moves.

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Building codes

One of the most important products in Microsoft's arsenal is a free, decade-old coding tool. It may not boast the reach and cachet of Windows or Office, but it's a household name in software development and the gold standard that AI coding startups want to displace.

Visual Studio Code was used by nearly 75% of all developers surveyed by Stack Overflow last year, and 40 million developers worldwide, said Amanda Silver, corporate vice president and head of product for Microsoft's Developer Division, in a recent interview. Along with GitHub, it's a vital piece of Microsoft's enterprise strategy, which banks on the goodwill developers have for both products to drive business to Azure and its other enterprise software products, but software development practices and preferences are changing rapidly.

• AI coding assistants are some of the fastest-growing enterprise generative AI applications, and two well-funded startups — Anysphere and Codeium — are taking on Microsoft and GitHub Copilot directly by forking VS Code and building their own approach to coding with the help of generative AI models.
• This week Anysphere, which makes a product called Cursor, announced that it had raised $105 million in new funding, and Codeium has raised a total of $246 million in funding for its Windsurf code editor.
• Investors and tech buyers are watching the evolution of a new generation of coding tools very closely, and so is Microsoft, which announced a reorganization this week that puts the teams that are working on developer tools under a new organization focused on building for "a new AI-first app stack," as CEO Satya Nadella put it.

Microsoft announced a preview of Visual Studio Code in April 2015, describing it as a lightweight, cross-platform version of its Visual Studio integrated development environment (IDE). While the terms "code editor" and "IDE" are often used interchangeably, code editors like VS Code are more like souped-up text editors compared to full-blown IDEs, which offer other features like debugging and testing.

• "When we first started on the Visual Studio Code mission … our goal was to allow our Azure cloud to be able to continue to grow and attract more and more developers, it was really important that we pitched a larger tent, and Visual Studio Code was really our effort to do that, " Silver said.
• That strategy worked. VS Code grew quickly thanks to its open-source legitimacy, its support for development on Mac and Linux as well as Windows, and compatibility with popular Web 2.0 programming languages like JavaScript and TypeScript.
• "A big part of VS Code has been the support of the open ecosystem," said Igor Ostrovsky, co-founder of Augment Code. "It's not just for GitHub; you can use Jira, you can use GitLab, and so having this highly pluggable architecture has been really important, and a big part of why VS Code has been successful."

But Anysphere and Codeium think coding assistants need to move in a different direction. Both companies are building AI coding editors based on forks of VS Code, which allows them to avoid completely reinventing the wheel by reusing core code-editing components but does allow them to put their own spin on the user interface and experience.

• "We started questioning everything about what an editor needed to have and not have if you had this AI flow that could search, traverse, and analyze code as well as make multi-file edits and execute terminal commands," Codeium wrote in a blog post last month describing the evolution of Windsurf. (Codeium and Anysphere did not respond to requests for comment on their plans.)
• A new generation of software developers is entering the workforce, professionals who were in grade school when former Microsoft CEO Steve Ballmer put a disconcerting amount of sweat equity into establishing the company's relationship with developers.
• They could have very different needs and preferences than the 40 million developers using VS Code, and whoever builds a product that makes their lives easier could shake up the market.
• "What actually affects an individual developer's day-to-day happiness is really productivity, almost that flow state that you think about," Silver said. "A developer is a creative that actually [needs] a sustained, heightened state of concentration to be able to do the job."

Read the rest of the full story on Runtime here.

Check out this month's edition of the Runtime Roundtable, which asked our panelists to answer a question near the top of almost every engineering leader's mind: What are the best ways to implement AI tools like agents in the software development process? As always, thanks to our panel of experts for helping their fellow tech leaders figure out the best course of action for their teams, and special thanks to Heroku from Salesforce for sponsoring this month's edition.

If you're interested in sponsoring a future edition of the Runtime Roundtable, please contact us here.

Take it or leave it

Microsoft and Google decided this week that almost everyone that depends on their suites of workplace productivity tools is going to join the generative AI revolution, like it or not.

Google announced Wednesday that all Google Workspace customers will now pay $2 more a month for the privilege of using its Gemini generative AI features, which are now included for "free" with all plans. On Thursday Microsoft followed suit, but only for its Home and Personal consumer customers, which feels like a temporary delay before raising prices (again) on its corporate customers..

It feels obvious to say it, but there's just no way that these two companies — which have been insisting for years that their AI tools are the future of the workplace — would take such steps if people were actually interested in using those tools. The road to clawing back their exorbitant investments in generative AI just got much longer.

Enterprise moves

Rob Greer is the new CEO at ExtraHop, joining the networking security company after serving as general manager of Broadcom's Enterprise Security Group.

Gareth Maclachlan is the new chief product officer at Trellix, a promotion from his previous role as senior vice president and general manager of its network and email business.

April Crichlow is the new chief marketing officer at AuditBoard, joining the risk management company from Centrical.

Sailesh Kottapalli joined Qualcomm in an unspecified chip design role after nearly 29 years at Intel, as Qualcomm once again prepares to break into the server chip market.

Kevin Egan is a new venture partner at IVP, joining the venture capital firm after a decade of sales roles at Atlassian, Slack, and Dropbox.

Casey Coleman is the new vice president of global public sector at ServiceNow, after eight years in a similar role at Salesforce.

The Runtime roundup

AI researcher François Chollet introduced Ndea, a startup that's betting "program synthesis holds the key to unlocking AGI," which … sure, fine, whatever.

Government agencies can now use OpenAI's GPT-4o after Microsoft met federal standards for cloud security, which … sure, fine, whatever.

Thanks for reading — see you Saturday!