Original URL: http://www.theregister.co.uk/2005/12/28/review_2005/
Of bubbles and developers
The big events of 2005
2005 in review Silicon Valley is a different place these days. After years of dot-com fallout, 2005 saw tech companies regain their self confidence - a fact signified by rapacious M&A, guilt-free spending on marketing activities and bold strategic statements.
Here are the events that made this year what it was, and that will have an impact on the coming 12 months.
IBM's turns open source on self with Gluecode
There's a common misunderstanding in Silicon Valley that IBM loves open source. It does, just as long as open source furthers IBM's own business and doesn't compete against products like WebSphere. That logic saw IBM buy open source application Java application server start-up Gluecode and agree to fund the Apache Geronimo project on which Gluecode is based. The deal was significant for two reasons: first, it was IBM's entrance into this year’s hot topic of charging for software as a service instead of charging per CPU. Secondly, it was designed to stop JBoss from building large market share at the expense of closed-source products like its WebSphere application server, which IBM would be forced to win back years from now.
Microsoft played nice with open source
We're not in Kansas any more when one of open source's harshest critics announces support for Linux in Windows Virtual Server 2005 and a Windows server integration deal with JBoss. What's going on? Microsoft demonstrated good business sense this year by toning down the rhetoric and recognizing if it continued to put itself outside of the open source market then it would lose business and - essential for Microsoft - developer mindshare. More than 20 per cent of Windows developers plan to build with open source according to analyst Evans Data, meaning that Microsoft could either work with people like JBoss and optimize Windows for the application server or it could see its developers drift away by using tools and server software from competitors whose products are optimized for JBoss. Shame Microsoft hasn't experienced the same moment of clarity on Office.
Everyone was bitten by the Web 2.0 bug in 2005. Search and social networking were this year's hottest subjects. You couldn't mention Microsoft's desktop and internet search strategy without referencing Google, while Google's run-away train ads business and drip-drip drain on
Microsoft's talent pool prompted a fit of chair hurling range from chief executive Steve Ballmer and the very dubious launch of Microsoft's Live Software strategy positioned rather clumsily as the successor to, and logical extension of, .NET. Start-ups meanwhile turned down $40m investments from VCs for the chance of being acquired by Google or Yahoo! - the latter who seemed to get its act together and started talking about its own Google-esq plans. 2005 felt awfully like a bubble year and it was, in terms of hype. However, a real shift did take place: software paid for as service captured the imaginations of IBM, SAP and Microsoft - big platform players with tons of influence - who took steps towards this pricing metric. Meanwhile, Really Simple Syndication (RSS) made its way into enterprise software - CRM from Salesforce.com with plans by Microsoft to use RSS in its own CRM.
It's a rich man's world
If 2000 was the year of the IPO then 2005 was the year of the acquisition. Computer Associates, BEA Systems, IBM, SAP, Sun Microsystems - even Microsoft loosened its famously tight purse strings and splashed out. For small acquirees, purchase became a viable exit strategy alternative to IPOing because it sidestepped the cost of running a public company. For the big boys, acquisition either brought in new technologies they couldn't be bothered developing or unlocked new customers in a saturated market looking for growth. Licensing challenged BEA bought Plumtree for its customers while Sun acquired SeeBeyond to get a sales force actually capable of selling software. Microsoft and CA were more targeted and tapped into security while SAP went deeper into vertical markets. Of course, the year's most acquisitive company was Oracle: $20bn on 14 companies in 12 months. From the tiny - TimesTen - to the strategic - Retek - to the huge - PeopleSoft and Siebel Systems, Oracle CEO Larry Ellison spent across the board to consolidate Oracle's market position, hobble the competition and ensure Oracle eventually over takes SAP as the world's largest provider of business software.
Developers, developers, developers