Whenever a big technology vendor acquires another, rumors about success or failure are sure to follow. Generally there is a bit of a grace period, but six to nine months down the line, the grapevine gets active with tales of woe, and Wall Street really pays attention.
Symantec still gets questioned about Veritas, while EMC can't shake scrutiny about RSA. Now Citrix has joined this club as many industry and investment pundits are questioning whether Citrix got its money's worth when it bought XenSource last August. The doubting Thomases say that Citrix is failing in the virtualization server market and is slowly fading away and seeding this space to VMware and Microsoft.
When ESG's virtualization guru Mark Bowker heard these whispers, he asked Citrix for a few post acquisition server virtualization metrics to judge for himself. Based upon this information, it appears Citrix continues to invest in and benefit from its acquisition of XenSource and its server virtualization product, XenServer. For example, Citrix says that XenServer sales continue to double each quarter and that all the major x86 server vendors are actively bundling and shipping the product. Citrix has also increased the number of trained XenServer resellers from 300 to more than 2,500 in that timeframe. Finally, Citrix is making internal investments in sales and marketing staff and actually delivered a new version of XenServer this March. Sounds like progress to me.
In 1987, I entered the tech industry workforce and competed head-to-head with IBM for sales. At that time, IBM was masterful at a sales tactic called FUD (i.e. fear, uncertainty, and doubt), using innuendo and rumor as a way of dissing the competition. Times have changed, but FUD remains a key competitive sales tactic. In the Internet age however, sales-based FUD quickly turns into industry and Wall Street rumor.
The naysayers never die and Citrix is now caught in the vortex. The only way out is communications, continuing progress, and more success metrics like these.
Everyone in the industry remains ga-ga over server virtualization and with good reasons. According to ESG Research, over half of organizations large and small have already implemented server virtualization and of these users, 46 percent claim that they are running Tier 1 business applications on virtual hosts. The numbers don't lie. Virtualization has moved well beyond industry hyperbole.
Yup, server virtualization is great but it doesn't live in isolation. For server virtualization to work well, it needs to blend with networks, applications, and management tools to create a virtualization architecture. This isn't easy and few vendors understand all of these layers well enough to make things work. As so often happens, CIOs are left to piece together their own solutions. Surely there must be a better way.
Enter Citrix, the company best known for its Presentation Server product. Citrix acquired XenSource last year and promised to deliver virtualization from desktop to data center. This week, Citrix took a giant step in this direction with the introduction of a new virtualization architecture called Citrix Delivery Center.
The beauty of Delivery Center is that it is a one-stop shop combining desktop, server, network, and application virtualization together. Heck, Citrix even includes a whole bunch of other tools for access, identity, and performance management and also introduced a central virtualization management system named Workflow Studio to orchestrate the whole enchilada.
Citrix has plenty of work ahead of it and Delivery Center is no guarantee of success. Nevertheless, the fact that Citrix is approaching virtualization from an architecture basis shows a lot of intelligence and moxie. In effect, Citrix is becoming a virtualization one-stop shop. Large companies seeking the benefits of virtualization while avoiding system integration headaches will certainly appreciate the value in inherent in this model.
(Credit:
Zim Rent-a-car)
I read this Charlie Babcock (InformationWeek) interview with Peter Levine (CEO, XenSource) and Wes Wasson (corporate VP of worldwide marketing, Citrix), and I'm left with the feeling that XenSource really doesn't see Xen's future in open source, but rather in Windows.
Which makes me think it may be time to fork the project and move on. But then, the company already did that for us, didn't it?
... Read moreSaying open source is incidental to Citrix's acquisition of XenSource is like saying one would buy Red Hat and not care much about its role in the Linux kernel. Yet Matthew Aslett and Raven Zachary both suggest precisely this.
I guess they're following the flawed reasoning that Savio Rodrigues uses. Namely, that if Citrix cared about Xen and not just XenSource's proprietary technology, it could just fork Xen for free. This would be true if it weren't false. Xen without open source is an emperor without clothes.
It's also the reason that Novell failed to entice XenSource into an acquisition when it was knocking on Peter Levine's door nine months ago. It tried the "fork" argument, and gave a low valuation as a result. Guess who acquired XenSource?
... Read moreWow. The ink was barely dry on my critique of Tim O'Reilly's position on whether proprietary companies will buy up the open-source companies, and along comes the news that Citrix is buying XenSource. It's a good technology fit, but Citrix would have been one of the last companies I would have accused of a predilection for open source.
Mea ignoranta.
The news is pretty intriguing, and funny on at least one count:
... Read more
One day after the spectacular public offering of virtualization company VMware, Citrix Systems on Wednesday said that it intends to acquire open-source virtualization company XenSource for about $500 million.
Citrix makes so-called thin client software that delivers business applications from servers to desktop computers.
By acquiring XenSource, the company intends to move into the adjacent server and desktop virtualization market.
The acquisition will be financed through a combination of stock and cash and includes the assumption of $107 million in a vested stock options.
The company's open-source "hypervisor" software, called Xen, lets a single computer run multiple operating systems simultaneously, which is a useful way to replace servers with one, more efficiently used computer.
Xen is included in the two most used Linux server distributions from Red Hat and Novell and also works on Microsoft Windows. XenSource's commercial offering, XenEnterprise, is based on the Xen software.
Gartner analyst Tom Bittman said that the price tag was high for XenSource and the acquiring company is a surprise.
"We wouldn't have expected Citrix to make the acquisition. We would have expected IBM, HP, Oracle, maybe Novell or Symantec," he said.
Virtualization has become a hot technology in IT because it allows corporate customers to lower their computing costs by packing more computing jobs onto fewer computers. The virtualization market leader VMware went public yesterday, with its stock price shooting to $51 from its offering price of $29.
The purchase is a significant departure for Citrix whose focus now is centralized management of desktops, rather than managing corporate data center servers, Bittman said.
Also, the deal raises questions over Citrix's relationship with Microsoft. He said that Citrix could choose to compete head-to-head against Microsoft's forthcoming server virtualization software called Viridian, or Microsoft could choose to use some of XenSource's software rather than develop itself.
"The market needs competition in this area. Customers need strong competitors to VMware...because prices have been artificially high," he said. "If this acquisition makes Xen and XenSource more viable, it's a good thing for the market."
The Xen software and XenSource employees will form a new Virtualization and Management Division at Citrix headed by XenSource CEO Peter Levine. In a statement, Levine said that the company intends to expand further into server virtualization as well as desktop virtualization.
"This move is not about competing for the 5 percent of the market that is already being served. It's about steering into the 90 percent white space that is wide open, both at the server and in new emerging opportunities at the desktop," Levine said in a statement.
The combination of XenSource and Citrix's established distribution infrastructure will make XenSource's software available to a far larger audience, said Nick Sturiale, a general partner at Sevin Rosen Funds and a XenSource board member.
"XenEnterprise (version) 4, which is a tour de force product, just came out. Now it can go through Citrix's 5,000 channel partners which is going to be a very exciting spin-up, making it available to a much broader market," Sturiale said.
In a report, research group the 451 Group said that the acquisition stands to turn the competitive heat up on VMware.
"The virtualization market now revolves around three players: market darling VMware; Citrix's combination of young blood and old money; and the (potential) threat of Microsoft's Viridian, slated to ship in Q3 2008. Both Citrix and VMware have a 12-month window of opportunity before Microsoft shows its full hand," the report said.
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