As December rolls around its time to take stock of the past year. It has been just over two years since I joined 10gen to work on MongoDB and I’ve started to understand the impact of open source on the software development process, as a business strategy and as a way to build communities. Looking back, 2011 has been quite a phenomenal year for open source projects and companies.

Without a doubt, the open source project that generated the most buzz this year is Hadoop, which was started over 5 years ago for processing and analyzing large amounts of data. Spurred on by the interest in ‘big data’, Hadoop made huge advances this year - and even had two of its most prominent commercial backers, Hortonworks and Cloudera battling over who has contributed more code to the project. Hadoop is a prime example of the virtuous cycle with open source: developers are attracted to interesting open source projects. Assuming the project is good, it is used and improved by the community. Eventually, high profile successes create more mainstream awareness, which snowballs into more development, investment, and a large ecosystem around around the project. While open source doesn’t imply success, the spirit of collaboration and transparency embodied by many open source projects serve as a catalyst for kick starting the cycle. If 2011 is any indication - as an understanding that open source is more than just free software becomes prevalent - we’ll start to see an increasing amount of software developed according to open source principles. Regardless of whether this is done by companies or individual developers, the tech industry at large will benefit from this.

Big companies bet big (and small) on open source

2011 saw a number of the large technology companies launch new open source initiatives and I’ve picked 4 which best illustrate the way companies are embracing open source:

VMware: One of the boldest moves in open source this year was the release of CloudFoundry by VMware. Released under an Apache license on GitHub, the platform-as-a-service has rapidly gained a large ecosystem around it with companies contributing language support and incorporating it into commercial products. CloudFoundry shows how putting open source front-and-center can enable a company to work with the open source community to rapidly advance a platform.

Microsoft: Last week, Microsoft made some strong moves towards creating a receptive environment for open source software on its Windows Azure cloud platform. In a wide ranging announcement, it open sourced Azure SDKs for .NET, Java and NodeJS and enabled support for Apache Hadoop and MongoDB on Azure. Microsoft’s moves highlights the growing importance of both interoperating with open source software, as well as pursuing a more transparent development process.

Dell: While not very well known, Dell’s crowbar project is interesting as it shows how a hardware company can contribute open source software in order to drive innovation and add value to a complimentary platform (in this case server hardware). Crowbar builds on Chef and allows one to provision and configure software like OpenStack, CloudFoundry, and Hadoop to Dell (and potentially other) hardware.

eBay/PayPal:  The new x.commerce platform is going to be interesting to watch over the next year. Built on open source projects such as Ubuntu, OpenStack, CloudFoundry, Hadoop and MongoDB, it aims to both expose the capabilities of eBay  (PayPal, Magento, Milo, etc) and give developers a platform to deliver commerce applications to merchants. Development of the core API and parts of the platform are open sourced with a developer kit available for download. Watch chief architect Jeromy Carriere’s talk to understand why eBay is betting so big on open source (and his “open source is free like puppy” analogy is great!)

Open source = $$$$

The other big trend this year was investment in open source companies. Indications are that 2011 has had the largest amount of VC money invested (close to $700m) in companies whose core business is open source software. This has largely been driven by interest in cloud and big data technologies. Some of most innovative technologies that are coming out in these areas are open source, and traditional software vendors have often been left trying to play catchup. This is markedly different from previous open source successes (such as MySQL, JBoss, RedHat), which though innovative in their own way were (arguably) replacements for existing technologies.

While some might attribute the dollars to an investment bubble - there seems to be some sound rationale behind the investments. The question looming over any business that develops open source software is whether it can effectively monetize the usage of its software. If RedHat’s recent performance (beating market expectations 6 quarters in a row) is any indication, the answer is most definitely yes.

Will it continue?

With very high profile open source projects, traditional technology companies embracing open source, and investments flowing in 2011 - the question is whether this will continue. My belief is that we are in the midst of transformational change in the way software is developed, marketed, packaged and sold. The advent of cloud infrastructure services such as Amazon has dramatically lowered the cost of acquiring computing infrastructure and is freeing developers from the contraints of a traditional IT procurement process. Developers are gravitating towards not just the best software to solve their problems, but towards a process by which they can openly and transparently engage with the development community - which open source promotes. As a result, I think we’ll see a lot more great code open sourced and I’m looking forward to 2012.

[Disclosure: As part of my role at 10gen, I work with many of the companies mentioned in this post]