Re:Viewing 2004: Software and open source
A year neatly tied up with mega-mergers and a court ruling
Consolidation hits the big time. Open source starts wars. Microsoft has its finger in every pie. ASPs are back. Lawsuits abound. And what about Apple? Sylvia Carr looks back at the year that was for the software industry - and predicts what we'll be talking about in 2005.2004 ended with a bang in the software world. Two major mergers in one week, one the culmination of 18 months of drama, and then a ruling on a major court case. You'd think the software gods were planning it so journalists could write a neatly tied-up 'year in review' piece.
The drama, of course, was over Oracle's hostile takeover of PeopleSoft which on 13 December resulted in Larry Ellison getting his way to the tune of a $10bn acquisition. The deal came after more than a year of bitter bidding, several lawsuits and even a court trial complete with an appearance by Ellison himself.
The second merger was security software maker Symantec buying storage management software maker Veritas for a cool $13.5bn. The deal expands Symantec's reach greatly, makes it a more serious enterprise player and follows the trend of vendors wanting to fulfil all of their customers' needs.
These were not the only two deals - consolidation in the software space is moving on apace and will continue into 2005. Before we go on, though, let's not forget to acknowledge the biggest merger that never happened: Microsoft and SAP.
And the court ruling? We're still waiting but word has it that this week a European Union court will rule on whether sanctions against Microsoft in its antitrust case will be suspended until the company's appeal is over. In March the European Commission found Microsoft guilty of anti-competitive behaviour, imposed a €497m fine and forced it to sell an unbundled version of Windows in Europe. Microsoft paid the fine but appealed the decision - a process that'll take years to resolve.
Whatever is decided this week could still be appealed in the European Court of Justice.
In other notable court cases, this year the SCO Group continued its legal assaults related to claims it owns the rights to the Unix operating system. It sued Novell in January for falsely claiming it controls the Unix operating system - and in March went after Unix users AutoZone and DaimlerChrysler. Though SCO was seen as less of a menace than in 2003 - with the DaimlerChrysler suit essentially thrown out and the AutoZone case pending other decisions - the fun's not over. SCO's suit against IBM, originally filed back in 2003 and which now seeks $5bn in damages over the alleged misuse of Unix, will go to trial in late 2005. After that, Red Hat's suit against SCO to disprove accusations that Linux code is tainted with copyrighted Unix code will be able to move forward.
The year also saw Novell bring fresh anti-competitive claims in the desktop space against Microsoft and several claims against Computer Associates for ripping off intellectual property.
Open source played an increasingly far-reaching role in the commercial software industry.
It was an open source application - Mozilla's Firefox - that brought about the second browser war. Following years of dominance by Microsoft's Internet Explorer (after it squashed Netscape), grassroots support and user-funded ads in the New York Times have catapulted Firefox to popularity. Ten million downloads and counting.
Mozilla's email client Thunderbird is waiting in the wings for next year. Enterprise email is certainly a different game than the browser but (prediction ahead): watch out Outlook.
2004 was the year public sector deals became a major battlefield in the Microsoft/Linux wars. After some waffling, Munich and Norwegian city Bergen switched to open source while Paris couldn't decide and the UK's Newham Council and NHS chose Microsoft.
As for Linux itself, the OS started the year with a kernel update and ended with market researcher IDC predicting revenue for hardware and software running on Linux will be worth $35bn by 2008.
On the sidelines Sun, Novell and Red Hat came out with Linux software for the desktop while Sun has also released the Solaris operating system for free (almost) in a bid to go head-to-head with Red Hat.
If you needed any more evidence of the threat Linux represents, just look at Microsoft's defensive 'Get the Facts' roadshow. Meant to explain how Windows can work out cheaper than the open source OS, the festivities included Microsoft execs implying Linux supporters are waging a "jihad" against Redmond. Despite this fervour the software giant couldn't help but dip its own toes in the open source waters with a collaborative creative tool.
As big a story for open source as Linux is databases and enterprise apps gaining prominence. Take database maker MySQL which saw revenues double this year, as they did from 2002 to 2003.
The open source versus proprietary battle continued to play out on the international stage this year with Brazil going open source, Korea spearheading open source projects, the rise of Asianux and China signing both Windows and Linux deals - though Beijing showed concern over public sector wins for Western IT companies. Expect China to stay in the platform wars spotlight in 2005.
Before we move on from open source, a quick nod to CollabNet, an example of a company straddling the open source and commercial software worlds. It offers both open source and proprietary software development tools to customers - but for a price, rented as 'software as a service'.
Speaking of which, 'software as a service' is a delivery method that's come into its own this year after fizzling out years back when players were known as application service providers (ASPs).
The method's been popularised by the likes of Salesforce.com and RightNow, both of which have come into their own this year with headline-grabbing IPOs. Despite being sued for misleading shareholders to prop up its IPO price, Salesforce.com has gone from strength to strength with subscribers and revenues surging this autumn.
The popularity of software as a service opens up the whole debate on how we'll pay for software, with some believing the days of traditional per-seat licensing are numbered.
After becoming a hackneyed term, CRM had a comeback of sorts in 2004 - no doubt aided by aforementioned CRM vendor Salesforce.com injecting some life into the space.
Elsewhere in enterprise software, signs point to a bright future for enterprise resource planning (ERP) - watch this space in 2005.
Apple - remember them? It wasn't the biggest year for the Cupertino company in terms of software as all eyes were on the company's digital music happenings - the iPod Mini, the iTunes launch in the UK and wrangling with RealNetworks over digital rights.
GarageBand, software for home musicians, appeared in January. For Mac OS X, it was a year of security updates and incremental tweaks. The big news on the software front for Apple will be in 2005, when the next OS rev Tiger is released, which we got a peek at in June.
There's still more from Microsoft - it's not called a software giant for nothing. Chronologically the year started off with record revenues in January, portions of its source code being published online in February and a major Office update in July.
This was also the year Redmond started to feel its way into emerging markets such as India, Russia, Thailand and Indonesia - no easy task - with a stripped-down, low-cost version of Windows.
But it's Windows XP SP2 that's closest to the heart of many users. After several delays and a drawn-out development process, the roll-up of security updates was released in August.
Just when we thought it was safe to install, further delays were experienced in the internet rollout of the service pack as enterprises weren't ready for it - seems it conflicted with applications businesses considered critical.
Flaws were found almost immediately and new holes patched up through December.
Nonetheless, XP SP2 has beaten Microsoft's target for take-up, passing the 100 million download mark in October.
As for the future of Windows, Microsoft now says the next version, Longhorn, will be ready for desktops in 2006 and servers in 2007. We'll see.
Looking ahead to 2005, it'll be more of the same - more consolidation, more commercial success for open source, more Chinese influence and more from usual suspects Apple and Microsoft.
A final issue not to be forgotten is whether Europe will legalise software patents - a topic of much debate this year which will not be decided on until 2005. So the software gods have left loose a few strings to hold our attention into the New Year.