With its recent acquisitions in the areas of network acceleration and optimization, client-server performance monitoring, and software streaming, Citrix continues to build-out a compelling end-to-end application delivery and access platform. The acquisition of XenSource came earlier than expected, and the rather hefty price tag suggests that XenSource may well have had other suitors in pursuit. However, the acquisition has undoubtedly brought together a good match, as Citrix is very well positioned to take server and desktop virtualization technology to the masses through its strong partner network and trusted status within the enterprise IT department.
For the moment, XenSource will continue to play the dual role of leading the open source Xen hypervisor project, while simultaneously developing and selling value-added enterprise solutions based on Xen technology. Founded and run by the original Xen development team, the company has, to date, dedicated a significant amount of its own engineering resources to developing open source technology to maintain the Xen hypervisor.
Developed collaboratively by engineers from companies such as Intel, AMD, Cisco, Dell, Egenera, HP, IBM, Mellanox, Network Appliance, Novell, Red Hat, SGI, Sun, Unisys, Veritas, Voltaire and XenSource, Xen is licensed under the GNU general public license (GPL2). The Xen code has already found its way into Linux distributions from Novell and Red Hat, and is also available in Sun Microsystems’s Solaris 10. Moreover, Windows Server 2008 has been designed to run on the Xen hypervisor, and so this could present something of a challenge to server virtualization market leader VMware a little further down the line.
The XenSource v4 product family includes XenEnterprise, XenServer, and the free XenExpress starter package, all of which compete for attention in some shape or form with products from VMware and industry giant Microsoft. Citrix is expected to invest heavily in cross-marketing and up-selling opportunities over the coming months as the company tightens its grip on this fledgling addition.
A company with revenues of over $1 billion in 2006, Citrix is by no means a lightweight in the IT industry, and so VMware could get caught in a classic pincer movement as Microsoft and Citrix go after the Windows server market, less than 10% of which is currently virtualized.
In a week when EMC raked in nearly $1 billion by selling off a 13% slice of VMware stock, the $500 million purchase price for start-up XenSource might look a bit steep to some. However, as the IT virtualization market is expected to grow rapidly over the next three years, it seems more likely that Citrix has invested wisely rather than foolishly.
Source: OpinionWire by Butler Group (www.butlergroup.com)
