"The nature of the open source movement and its software over the years has changed considerably. From its humble beginnings in the early 80s to mainstream Android adoption, open source software along with computers and technology as a whole has gone from the sidelines to a prevalent position in the lives of modern consumers."
Read below for the rest of what CowboyNeal has to say.
The open source movement that we know today has its roots in both academia and hobbyists dating back to the late 1970s and early 1980s. Before even the founding of the FSF, public domain software was available in abundance. Software packages of all sorts were freely given away or sold for the cost of copying them. It's important to note that a given piece of public domain software may or may not have come with its source code, so while it was free in the cost sense, it wasn't yet strictly free in the freedom sense. The early versions of Bell Labs Unix included the source code, which users could use to modify and extend the OS. In 1978, Bill Joy, then a graduate student at Berkeley, released the first Berkeley Software Distribution, or BSD. Rather than a complete OS, BSD was an add-on to V6 Unix. BSD would grow over the years that followed to become a nearly complete operating system. In 1983, Richard Stallman at MIT began the GNU project, to develop a free software version of Unix. By 1985, the GNU version of Emacs had its first release, and in 1987, the GNU C Compiler would follow. As parts of a possible GNU system began to coalesce, soon all that was missing was a kernel.
Both BSD and the GNU project would continue on through the early 1990s, when new catalysts for change were introduced. The release of a new BSD aimed at desktop and consumer hardware, 386BSD, was held up in courts by AT&T. Also around this time a Finnish student, Linus Torvalds, would release his first operating system kernel called Linux, in 1991. By 1992, Linux would adopt the GNU Public License, and be distributed with the userland that GNU had built. Since the GNU system was nearly complete but lacked a kernel, it was a natural pairing. Also in 1992, the BSD legal case would finally be resolved, and the parts of BSD that weren't written by AT&T were released to the public, and while it was short-lived, it became the basis for NetBSD and FreeBSD, and other BSD-based operating systems. Though In 1993, an event far bigger than just the world of software hackers took place. For the first time, private individuals could acquire access to the Internet. No longer did someone have to be affiliated with a government or educational institution to get onto the Internet. This rapid influx of enthusiasts provided new manpower for both Linux and BSD projects.
In 1995, the Apache Project would make its first release, based on the source code of NCSA HTTPd, which was nearly ubiquitous as the web server used to power the Internet. Over the years, the NCSA code would be slowly rewritten, and Apache would take over NCSA HTTPd's position as the predominant web server.
By 1998, the open source movement had rapidly grown, but hadn't yet been named as such. In early 1998, Netscape announced that they would release the source code for their flagship product, Navigator. In response to this as well as the growing popularity of Linux and BSD operating systems, the term "open source" was coined and later the Open Source Initiative (OSI) was founded by Bruce Perens and Eric S. Raymond. The OSI was founded as an organization for education and advocacy, and was inclusive of GPL, BSD, and other "open source compatible" licensed software, such as the Apache Web Server and XFree86 windowing system.
From here it seemed that the sky was the limit for open source software. Over the next few years, Linux would become the de facto server software for many organizations. While desktop market share eluded Linux outside of the hobbyist and enthusiast circles, its place in the data center would be securely cemented. In 2003, a then-little-known-of company called Android, Inc. was formed and began working on software for mobile phones. Before releasing anything, they were acquired by Google in 2005 and set to work on a mobile device platform powered by Linux. In 2007, Google and many other hardware and software companies announced the Open Handset Alliance, and unveiled the Android operating system, which was built on the Linux kernel. A year later in 2008, the first Android device would ship, and by 2010, Google would begin selling their own phones, after partnering with other manufacturers.
By 2008, another odd turn of events would happen. Microsoft was long an enemy of open source and free software, seeing them as potential competitors to its proprietary systems. Soon even the giant of the proprietary software world, would begin to utilize open source software licenses. Microsoft would go so far as to use open source software as part of Windows Azure, and eventually even donate code to the Samba project.
While Linux hasn't taken over desktops in droves here in the states, the same can't be said overseas. Traffic estimates to SourceForge consistently place domestic traffic in only the 15-20% range, meaning that anywhere from 80-85% of the downloads are going overseas, where open source is an easier sell, given the prohibitive cost of a proprietary operating system. However, given the lack of actual sales figures, it's difficult to pin down how widespread open software usage actually is. One place that Linux has won big stateside, in the form of Android, is the mobile phone market, where Android now powers 52% of the smartphones domestically, and 68% of the smartphones in the entire world. 2012 saw another milestone for Linux, when Red Hat, Inc. became the first Linux company to boast of a billion dollars of revenue within a single fiscal year.
It's still difficult to predict what the future holds for open source software. With the advent of programs such as One Laptop per Child (OLPC), which has put Linux-based laptops into the hands of nearly 2 million children, a new generation of children are being raised on open source software overseas. Government adoption of open source software is as it is in other sectors, where Linux has a foothold on the server, but hasn't made significant strides into end user territory yet. That looks to be changing somewhat, with recent movements in Jordan and France, but the change is still slow in happening.