The 10 Biggest Software Stories Of 2014

Software: Transitions All Around

The software side of the IT industry has never been dull. But in 2014 "transition" seemed to be the magic word as vendors of all kinds tried to transform themselves, from hardware to software, from on-premise applications to cloud applications, and from old business models and unsuccessful product lines to new (hopefully) successful businesses.

It was also a year in which old technologies (bye bye, Windows XP) were out and growth technologies like Hadoop and software-defined networking were in. And, as with every year, there were some serious missteps.

We reviewed the year's headlines and came up with our picks for the top 10 stories of the year in the software industry. Also, check out the rest of CRN's biggest and best of 2014.

10. Oracle's Ellison Relinquishes CEO Role

At first this seemed like a bombshell: Oracle co-founder and long-time CEO Larry Ellison announced in September that he was stepping down.

Ellison, however, wasn't going anywhere. He named himself Oracle CTO and took over as chairman of the software company's board (which he was already on). Mark Hurd and Safra Catz were named co-CEOs to run the company on a day-to-day basis -- which they more-or-less had been doing already as co-presidents. Oh, and he still owns 1.1 billion Oracle shares, about 25 percent of the company's outstanding stock.

But this was still a big deal, if for nothing else than for the symbolism. Ellison, 70, is one of Silicon Valley's originals, a database programmer who helped start the company in 1977 that now has annual sales of $38 billion. And he frequently plays the part of industry agitator, trash-talking competitors and speaking his mind about industry trends. Let's hope that's a role he doesn't relinquish.

9. SAP Acquires Cloud T&E App Vendor Concur For $8.3 Billion

SAP announced a deal in September to acquire Concur, a developer of online travel and expense management applications, for $8.3 billion. The acquisition, one of the IT industry's biggest in 2014, was completed Dec. 4.

SAP originally made its mark by selling on-premise ERP applications to big companies. But in recent years the Waldorf, Germany-based company has turned to the cloud big time, making such acquisitions as SuccessFactors in 2012 ($3.4 billion) and developing new lines of cloud software internally.

Given that Concur's annual revenue was less than $1 billion, SAP certainly paid a premium for the company. The acquisition does bring 23,000 customers with 25 million users to SAP. And it puts the company's cloud revenue run rate ahead of arch-rival Oracle. While it remains to be seen if the Concur acquisition fulfills its promise, there's no longer any doubt about SAP's cloud commitment.

8. End Of Windows XP Support Boosts Channel Sales

Some had warned that the end of Windows XP support would lead to major security breaches, failing systems and other Y2K-like disruptions. While it created headaches for many businesses, some of the more dire predictions didn't come to pass. (Come to think of it, Y2K was kind of a bust as well.)

But the end of Microsoft support for the 12-year-old desktop operating system on April 8 was a very big deal for the channel. It spurred demand for new PCs, applications (support for Office 2003 also ended), new network and security equipment, and even upgraded Wi-Fi systems, providing a significant economic boost for solution providers, distributors and other denizens of the channel.

The growth generated by the end of Windows XP support especially provided a shot in the arm for the PC market, which had suffered significant sales declines in recent years due to the popularity of tablet computers.

7. Hadoop Is Hot

Apache Hadoop has been steadily gaining steam since its initial release in December, 2011, and in three years it has become the de facto standard big data platform. But it really took off in 2014 as some of the IT industry's biggest players got Hadoop religion.

Intel demonstrated its interest in Hadoop in March by acquiring an 18-percent stake in Hadoop distributor Cloudera for $740 million, part of a whopping $900-million round of financing. Hewlett-Packard invested $50 million in Hortonworks in July and integrated th HP HAVEn big data software with the company's Hadoop distribution. Dell is providing Hadoop integration services through an alliance with Cloudera. And Hadoop distributor MapR Technologies formed strategic relationships with business analytics stalwarts SAS and Teradata.

Solution providers also got into the Hadoop game. Accenture struck an alliance with Hortonworks while Capgemini extended a partnership with Cloudera. And solution provider Sirius Computer Solutions boosted its Hadoop expertise with its $1.3 billion planned acquisition of Brightlight Consulting.

6. Apple Botches iOS 8 Update

The iPhone 6, arguably Apple's biggest product announcement in 2014, was supposed to be the company's moment of triumph for the year. But the launch was seriously tarnished one week later by a buggy update to the device's iOS 8 mobile operating system.

The update, iOS 8.0.1, caused iPhone 6 users to lose their cell service and disabled their Touch ID feature. Facing complaints from angry customers, Apple had to pull the update from the app store within two hours of its release and red-faced Apple executives scrambled to issue a fix.

The iOS 8.0.1 failure wasn't quite on the "Doh!" scale as the company's epic Apple Map failure in 2012. But it was an uncharacteristic -- and highly visible -- stumble for a vendor that prides itself on developing products that seamlessly work together.

5. The Rise Of Software-Defined Everything

Software-defined networking, software-defined storage, software-defined data centers. Doesn't anyone make hardware anymore?

Apparently not. From major vendors such as Cisco Systems and Hewlett-Packard, to startups like Nutanix, Pertino and Pica8, IT vendors were tripping over themselves in 2014 to develop and launch software-defined technologies. And no wonder: IDC forecasts the software-defined networking market for enterprise and cloud service providers will reach $8 billion by 2018 with almost 90 percent CAGR. MarketsandMarkets says the software-defined storage market will grow 35 percent CAGR to $6.2 billion in 2019.

The software-defined (your technology here) revolution is a major industry disrupter, forcing manufacturers of storage systems, networking gear and other hardware "boxes" to rethink their product strategies.

4. Symantec Opts To Split Into Separate Security And Storage Businesses

Symantec entered 2014 part way through a multi-year plan to reorganize its operations, cut costs, overhaul its go-to-market strategy, and rationalize and better integrate its disparate product lines. But apparently things weren't moving fast enough and on March 20 president and CEO Steve Bennett was fired.

The company spent much of the year casting about for a new long-range strategy and on Oct. 9 Bennett's replacement, Michael Brown, unveiled a plan to split Symantec into two publicly traded companies: One focused on security products, including the popular Norton software, and the other on information management technology such as Backup Exec and NetBackup.

Will the two new companies (with fiscal 2014 sales of $4.2 billion and $2.5 billion, respectively) succeed? Nearly 10,000 Symantec channel partners are counting on it.

3. Windows 10 Debuts As Windows 8 Struggles

While Microsoft wants to become less Windows-centric, the PC operating system remains a mainstay of its product line – and a major factor in the channel. (See the earlier slide about the impact of the end of Windows XP support.)

So it was big news on Sept. 30 when Microsoft unveiled Windows 10, slated for availability in mid-2015, that's envisioned as a single operating system to run on everything from Internet-of-Everything sensors, to mobile devices, to PCs and laptops, to dat center servers.

By going right to "10" and skipping "9" in the Windows generational nomenclature, Microsoft is seen as distancing itself from the unpopular Windows 8. As of November Windows 8.0 and 8.1 accounted for less than 19 percent of the desktop OS market, finally surpassing Windows XP late in the year, but a far cry from Windows 7's 56 percent.

2. IBM's Rocky Transition To Software And Services

"We are reinventing and we are managing this company for the long term," IBM CEO Ginni Rometty told financial analysts in the company's third-quarter conference call in October.

That transformation has been underway for several years as Big Blue seeks to boost its sales of software and services and reduce its reliance on revenue from hardware. This year IBM took major steps in that direction, notably selling its x86 server business to Lenovo for $2.1 billion and paying GlobalFoundries $1.5 billion to take its money-losing chip unit.

IBM also acquired several software companies in 2014, including Database-as-a-Service vendor Cloudant, cloud security companies CrossIdeas and Lighthouse Security Group, and marketing automation app vendor Silverpop Systems. It also expanded its SoftLayer cloud business offerings.

But the transition has been bumpy: Software sales for the first three quarters of 2014 were up only 0.4 percent to $17.9 billion, taking a toll on the company's profitability.

1. Satya Nadella Takes Over As Microsoft CEO

After Steve Ballmer's surprise retirement announcement last year and a months-long search for a successor, Microsoft in February named Satya Nadella, head of the company's Cloud and Enterprise Engineering Group, to be the giant software vendor's new CEO.

Microsoft is arguably the most important software vendor in the channel. It has also struggled in recent years to find its competitive footing in an IT industry where the growth is in cloud computing and mobile devices -- not desktop computers where Microsoft is anchored.

In the 10 months he's been in charge Nadella has been reorganizing Microsoft and focusing its development efforts on becoming a "productivity and platform company for the mobile-first, cloud-first world" (there was also that gaffe in October when he said women shouldn't ask for raises). The question is whether he can change Microsoft, once seen as the most powerful company in the IT industry, quickly enough to keep it from slipping into irrelevance.