Of bubbles and developers

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.

Bubble 2.0

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