While 2011 was a very busy year for the technology industry, the constant rate of innovation and activity in the market shows that things probably won’t slow down in 2012. Below, we’ve rounded up some of GigaOM’s biggest stories of the year — roughly in the order that they occurred — with a bit of insight on what each could mean for 2012.

• AT&T’s billion bid to buy T-Mobile
• Facebook makes its data center details public
• Google and Facebook battle for the social networking crown
• Netflix screws up — again and again
• Spotify launches in the US
• Google buys Motorola Mobility for .5 billion
• Solyndra crashes and burns
• Hewlett-Packard’s soap opera
• Steve Jobs dies at age 56
• The tech IPO makes a big comeback

AT&T’s billion bid to buy T-Mobile

Sunday mornings are usually pretty sleepy in terms of business news, but March 20th, 2011 was an exception. That’s when AT&T announced its plan to buy T-Mobile USA from Deutsche Telekom AG for a whopping billion. A deal that huge naturally catches the attention of everyone: The media, consumer groups, industry competitors, and perhaps most importantly, federal regulators. After nearly nine months of back-and-forth about the legality of the merger that came to be known as AT&T-Mo, the deal fell apart: On December 19, AT&T ended its bid to buy T-Mobile as its CEO Randall Stephenson pledged to “continue to be aggressive in leading the mobile Internet revolution.”

What this means for 2012: As GigaOM’s Stacey Higginbotham pointed out, despite the failure of AT&T-Mo, major changes in the wireless space are inevitable and consolidation will continue:

Now that the deal is off the table, the industry can return to solving the big question that plagues wireless in the U.S.: How the heck will operators get the spectrum and build the networks they need to support robust demand for 4G wireless services and still make money. … AT&T’s bid to get more spectrum wasn’t just an attempt to take out a competitor; it really did need more spectrum for its LTE network, and having T-Mobile’s AWS airwaves ready for an LTE deployment would have made AT&T’s migration path a lot simpler. As operators move from 3G to 4G services such as LTE, they are learning the costs associated with remaking and upgrading their networks are substantial. And as they look ahead to spectrum-hogging standards such as LTE-Advanced, they need more megahertz.

Facebook makes its data center details public

Facebook's Prineville, Oregon datacenter

Most big Internet companies spend a lot of time and money on designing and maintaining data centers. But typically, these companies keep the nitty-gritty details of how they manage the servers that power their operations to themselves — the makeup and quantity of servers that run Google has long been some of the search company’s most highly-guarded secrets, for example (though Google has been sharing that data as of late). Facebook, however, decided to start telling the world about its data center details.

In April 2011, the social networking company debuted the Open Compute Project, in which it provided full specifications of its computing infrastructure. The reason, Facebook says on its OpenCompute.org website, is to help improve technology as a whole:

“We want you to tell us where we didn’t get it right and suggest how we could improve. And opening the technology means the community will make advances that we wouldn’t have discovered if we had kept it secret.”

What this means for 2012: More sharing in the infrastructure space, particularly around how to reduce energy consumption of data centers. Executives from Intel, RackSpace, Arista Networks and Goldman Sachs all joined the Open Compute Project’s board of directors. Of course, pledging to be “open” is almost always good PR, but with this particular initiative Facebook is leading the way with concrete efforts for real transparency in a major industry issue.

Google and Facebook battle for the social networking crown

In June, Google launched Google+, its newest answer to the social networking space that in recent years has been dominated by Facebook. That move seemed to spark renewed vigor from Facebook to maintain its social edge and the next week at a quickly-assembled press event for a new in-Facebook video chat app powered by Skype, Mark Zuckerberg kicked off what he called his company’s “Launching Season 2011.” This season also seemingly culminated with the September debut of Timeline, a dramatically different new Facebook user interface. Google, meanwhile, directed increasing amounts of its attention on trying to make Google+ a success.

What this means for 2012: Even more competitive activity and expect the year to be cut throat. Facebook and Google are showing no signs of backing down from the battle, and with its own bold new redesign, Twitter has thrown its cap into the ring to be the social networking site of choice.

Netflix screws up — again and again

Netflix CEO Reed Hastings

What a year it’s been for Netflix — and not in a good way. It all began in June, when the company announced changes in its pricing structure (splitting its DVD rental business from its online streaming business) that would significantly boost prices for the vast majority of customers. Not surprisingly, that didn’t go over so well. So in September, CEO Reed Hastings apologized for the changes and took back the price hike. Instead, he said, Netflix’s DVD rental business would be rebranded as Quikster and essentially put up for sale as the Netflix brand moved to a streaming-only model. That didn’t go over so well, either. So less than a month later, Netflix once again backtracked, killing the Quikster proposal and electing to keep DVD rentals in its core business. Wall Street analysts lauded Netflix’s ultimate decision to keep DVD rentals alive, but Wall Street punished the company nevertheless: Netflix share price dropped from nearly 0 earlier this year to about now.

What this means for 2012: Netflix has its work cut out for it, having closed out 2011 with its lowest customer satisfaction ratings in company history. GigaOM’s Ryan Lawler recently put it thusly:

“Netflix is still the clear leader in the online streaming space, with about 24 million subscribers. But for years Netflix has relied on the virtuous cycle of positive word-of-mouth to help propel its growth. With customer satisfaction declining rapidly, it’ll have to work harder to retain existing customers and to win new ones.”

Spotify launches in the US

Spotify, the popular Europe-based on-demand music streaming service, finally made its highly anticipated debut in the United States in mid-July. A couple months later, the service got an extra boost with a deep integration with Facebook that let users easily listen to songs on Spotify and share them with friends through the social networking service.

What this means for 2012: The buzz around Spotify seems to have spurred other online music services to bring their A-games to the space. Expect more innovation from Pandora, MOG, Rdio, Rhapsody and others.

Google buys Motorola Mobility for .5 billion

Andy Rubin (Google) and Dr. Sanjay K. Jha (Motorola) onstage at Mobilize 2009

Google shook up the dog days of mid-August when it announced plans to acquire Motorola Mobility for .5 billion. Once the deal is closed (it’s expected to go through in early 2012) Google will have bought access to Motorola’s portfolio of 17,000 current patents and 7,500 patent applications across wireless standards and non-essential patents on wireless service delivery.

What this means for 2012: The deal is such a huge one that all of its ramifications will take a while to become clear, but Google’s ultimate goal is to further strengthen the mobile strategy it built with the Android mobile operating system. With some 700,000 Android devices being activated daily, Google is already well-positioned in the mobile space — the Motorola investment shows that the company is in it for the long haul in mobile.

Solyndra crashes and burns

Solar panel maker Solyndra was one of the highest profile companies the cleantech space has seen in recent years, garnering visits from President Obama, and applause from Vice President Biden, DOE Secretary Steven Chu and then California Governor Arnold Schwarzenegger. The company even received a 5 million loan from the U.S. government.

So when the company filed for bankruptcy in August 2011, laid off more than 1,000 employees, and essentially lost the entire tax-payer funded loan, it was a huge blow for a number of industries: Technology, venture capital, and of course solar power. Ucilia Wang wrote in-depth about the story behind Solyndra’s rise and fall for GigaOM.

The bigger trend behind Solyndra has been global crashing solar prices. Thanks partly to Chinese solar companies flooding the market with low (and below) cost solar panels, solar panel makers throughout the world have been struggling and have been going out of businesses. While that’s not good news for those firms, it’s great for consumers, businesses and utilities that are buying solar  panels — solar has never been cheaper.

What this means for 2012: Being that the Solyndra implosion will go down as one of the biggest venture capital losses in history, VC firms will be understandably hesitant to invest in solar companies for quite some time. Also, the federal grants awarded to Solyndra have become a punchline of sorts in the political arena, so the U.S. government may also shy away from supporting solar companies for a while.

Hewlett-Packard’s soap opera

In August, Hewlett-Packard raised eyebrows when it announced plans to spend billion in cash to acquire Autonomy, a UK-based software and services company and said it would look into selling off its billion-a-year PC business. Investors and the industry at large were stunned by both moves which, apparently, were the last straw for HP’s board as well. A month later, HP fired Leo Apotheker, the CEO who brokered the deal and set the PC change in motion, and brought in former Ebay CEO Meg Whitman as his replacement.

What this means for 2012: As GigaOM’s Barb Darrow writes, 2012 is a crucial time for HP to work to “repair its reputation and restore itself to the status of IT icon.” Whether the company will succeed in doing so remains to be seen.

Steve Jobs dies at age 56

Apple co-founder Steve Jobs’ death on October 5 was a big story for the world even beyond the tech community. Although his passing was not completely unexpected — Jobs had suffered from pancreatic cancer and related complications for some time, and had stepped down from the CEO role at Apple in August because of his health — his death deeply affected many people. Jobs was hugely influential through his work at Apple and as a tech industry figure in general.

What this means for 2012: WordPress founder Matt Mullenweg recently told GigaOM that he thinks Jobs will affect tech in the months and years to come:

“Steve Jobs’ passing affected me more than I expected. I think we’re going to enter a golden age of design, just by virtue of thousands and thousands of founders and designers asking themselves, ‘What would Steve do?’ The things that these people will create will be even bigger than Apple. That’s part of his legacy.”

The web IPO makes a big comeback

A number of venture-backed web companies made their stock market debuts this year. LinkedIn (LNKD), Pandora Media, Zillow, Groupon, Zynga, and TripAdvisor- all went public in 2011. While not all of these companies had stellar post-IPO stock price performances, the very fact they got out the gate is a win in itself for investors and founders.

What this means for 2012: By the looks of it, the IPO wave is just getting started. Analysts say 2012 promises to be another big year for tech IPOs, and in the spring 2012 public offering expected from Facebook will likely be the star of the show.

Some images courtesy of HackingNetflix, whiteafrican, hyku, jdlasica, and Mathieu Thouvenin.

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Following the Federal Communications Commission’s decision to send the -billion proposed merger of AT&T and T-Mobile USA to an administrative hearing on Tuesday, AT&T has withdrawn its official application to combine its spectrum with T-Mobile’s. The company also said that it will take a -billion charge against earnings should the deal fall through. Both actions, which were taken on Wednesday, indicate that AT&T’s confidence in the deal is waning, and could be the final actions before a formal abandonment of the purchase.

AT&T still plans to fight the antitrust case that the Department of Justice has filed and has not said it plans to walk away from its deal just yet, but it clearly has realized that the forces arrayed against this combination will be hard to quell. As I noted on Tuesday, unless AT&T or T-Mobile pull the plug between now and then, the next big date should be the Department of Justice lawsuit hearing in February. From AT&T’s statement:

AT&T Inc. and Deutsche Telekom AG are continuing to pursue the sale of Deutsche Telekom’s U.S. wireless assets to AT&T and are taking this step to facilitate the consideration of all options at the FCC and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice either through the litigation pending before the United States District Court for the District of Columbia, Case No. 1:11-cv-01560 (ESH) or alternate means. As soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval.

The Department of Justice has come out against the deal, citing a lack of competition, while the FCC this week determined that the new entity wouldn’t create the jobs that AT&T has said it would, and in fact, would result in, “a massive loss of U.S. jobs and investment.” Since no one is buying AT&T’s and T-Mobile’s claims, perhaps the next big question is what happens next with T-Mobile. In the meantime, by taking a charge against its fourth-quarter earnings that reflects a -billion breakup fee and the -billion value of T-Mobile’s spectrum, AT&T is clearly prepping for trouble.

Given that the charge will occur before its day in court, I’m not sure if we should expect AT&T to walk before the close of this year, or if it’s just being cautious with Wall Street.

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Jonathan Heiliger, Vice President of Technical Operations at Facebook has been a longtime proponent of shaking up the web infrastructure establishment. From storage to chips to servers, he has been a vocal champion for infrastructure hardware that is made to the specifications of large Internet companies like Facebook.

That is why he is super excited about the formation of the Open Networking Foundation (ONF), a not-for-profit industry group that has been established to promote software-defined networks. ONF is being established with the backing of Internet giants Google, Yahoo and Facebook, along with Microsoft, Verizon and Deutsche Telekom. The foundation also has the backing of numerous hardware makers such as Broadcom, Cisco, Dell, HP, IBM, Juniper Networks, Marvell, NEC, Netgear and VMware.

The first task of ONF will be to adopt and then lead the ongoing development of the OpenFlow standard (www.openflow.org) and encourage its adoption by freely licensing it to all member companies. ONF will then begin the process of defining global management interfaces. (ONF Press Release)

At the core of the ONF is a piece of software, Open Flow, that was result of a joint research project between Stanford University and University of Berkeley. In her article earlier this year, Stacey Higginbotham thus described the Open Flow effort:

The idea behind the OpenFlow effort is that today’s network needs to be smarter and more flexible in order to handle and efficiently deliver more information. To do that, the fundamental idea is to separate the packet switching mechanisms and control functions. Users can freely develop and operate control middleware independently of the switching mechanism.

One of ONF’s big proponents, Nick McKeown, ONF Board member and professor at Stanford University when speaking at our Structure conference in June 2010 outlined his vision of software defined networks as becoming core to the future of the Internet.

McKeown pointed out that from big Internet companies to telecoms and data center operators, many are already experimenting with the idea of software-defined networking, and that is why it made perfect sense for various parties to come together and put all the momentum behind Open Flow.

In a phone conversation earlier today, McKeown explained that at its crudest, Open Flow is akin to the BIOS inside a personal computer, which is firmware software that talks to all hardware elements and then helps boot up the operating system (OS). On top of the BIOS sits the OS and upon the OS sit the applications. So Open Flow can view all the network elements (switches for instance) and then work with the a network operating system which in turn be used to build optimized applications.

Unlike the past when enterprises were often the cutting edge customers, today it is giants like Google and Facebook, who are often the purveyor’s of cutting edge technology and techniques. Their needs are very different from the hardware that is made and sold by companies like Cisco or Force 10, mostly because those companies cannot make hardware optimized for the needs for a specific web-organization. In addition, the gear supports a whole range of standards, which adds overhead and slows down the performance for a web company.

While networking technologies have also evolved in this time, the ONF believes that more rapid innovation is needed. SDN fulfills this need by enabling innovation in all kinds of networks through relatively simple software changes. SDN thus gives owners and operators of networks better control over their networks, allowing them to optimize network behavior to best serve their and their customers’ needs. (ONF Press Release)

Now, you can unleash the power of creative software writers at the network layer and use the networking infrastructure more effectively, said Facebook’s Heiliger. So for instance, Facebook could write its own network OS – and they are thinking about it – and write software applications to take advantage of the network.

For instance, a Hadoop-based application could use the network in the wee-hours of the morning to crunch data at a certain data center, depending on its geographical location and workload. During the day, the data center’s network is optimized for an all-together different application. “This opens up a Pandora’s box of creativity,” said Heiliger.

ONF has found favor amongst the academic communities for a long time, but with the establishment of ONF, it seems we are looking at a bright, commercial future for Open Flow, which is one of the more disruptive developments in the world of networking technology.

Today, theoretically speaking, a giant Internet company like Google can buy networking silicon from Broadcom, and build its own commodity switches and create its own network topography using Open Flow.  What cost millions of dollars could be built for tens of thousands of dollars – and that is going to change the economics of the data centers.

An apt analogy to me would be the arrival of x86 servers and their impact on Sun’s E10K super servers. In time, the minnows ate away at the whale. I wouldn’t be surprised if the same happens to the switching business first, and then to other elements of the networking ecosystem. An engineer familiar with the Open Flow technology joked that Open Flow frees you from the tyranny of the firmware providers. That is networking speak for Cisco, Juniper and Force 10 Networks.

Urs Hoelzle, Google’s Senior Vice President of Engineering at Google and ONF President and Chairman of the Board predicted that by end of this year we are going to see first of the Open Flow capable hardware come to market. In addition, he expects to see Open Flow 1.1-based controllers for data centers to come to market as well. Martin Casado who was one of the primary researchers on Open Flow has co-founded Nicira, which is building the Open Flow controller for the data centers, while Big Switch Networks, a stealth mode company is currently working on an Open Flow controller for the enterprise market.

Hoelzle cautioned that I shouldn’t get too ahead of myself, because it will be a couple of years before the technology starts to make its way through different elements of the networking hardware stack. When I asked him if we could one day see Open Flow make its way into our home networking gear – our home networks are getting inherently complex after all – Hoelzle said that is won’t be anytime soon, but it is within realm of possibility.

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