| The Truth Behind The Citrix XenSource Deal? |
| Sunday, 19 August 2007 by Michel Roth | |||
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Everybody is wondering what Citrix is going to do with this "hypervisor" technology and how Microsoft and VMware will respond to this. It's absolutely critical to note that all these speculations stem from one important assumption: that with XenSource, Citrix is buying a hypervisor (similar to ESX Server). But as one guest commented at BrianMadden.com , Citrix is NOT buying a hypervisor. Xen is the hypervisor. “All” that XenSource does is provide a management framework around the Xen hypervisor. Think of it like this: if Xen were VMware ESX then XenSource would be the developers of Virtual Center. Since Xen is a opensource hypervisor, it would be near to impossible for Citrix to “sell” this hypervisor. So it looks like Citrix just bought a set of management tools for 500 million dollars? Well yes and no. They did buy a set of management tools but this set was developed by a company that has been closer to the upcoming Microsoft Hypervisor “Viridian” than any other company. So if Citrix wanted to be the absolute first and best in value-add software for Viridian, who would they pick? Exactly, XenSource. They are not buying the product as so much but what’s even more: the "XenSource – Viridian legacy". So when you look at it this way, it’s as simple as it is brilliant. Citrix became a billion dollar company primarely through Presentation Server. As we all know Presentation Server is a product that can only exist together (or actually on top of – why does the phrase “shoulder of giants” come to mind? ) a Microsoft product: Terminal Server. Its been a good 12 years (since the release of Winframe) for Citrix yielding this strategy but I think Citrix also knows that the Terminal Server well is going to run dry one of these days (Windows Server 2008 Terminal Services is a start). So what next? I think Citrix is planning to perform the same trick all over again with Viridian: being the marketleader in providing value-add software for a key Microsoft product. They might not have that big edge they have with Presentation Server but I think they can still pull it off. If this all is correct then I bet that Microsoft will release Viridian far from enterprise-ready just like (the earlier versions of) Terminal Server. So technically speaking Citrix isn’t really competing with VMware as a whole… just with Virtual Center. In effect, Citrix only teamed up (even more) with Microsoft against VMware. That should be interesting…. Citrix must have figured to never change a winning team. This also answers any questions about Microsofts opinion about this deal. Microsoft isn't just "OK" with it, Microsoft must have co-developed the deal together with Citrix and XenSource! Another big advantage for Microsoft is this deal, is that they indirectly "deal" with their opensource competitors. XenSource is the driving force behind the development of the Xen Hypervisor (read a lot more about this in this article on BrianMadden.com). Now that Citrix calls the shots over at XenSource, you can bet that the XenSource's drive to keep developing the Xen hypervisor will get less over time. Sure, XenSource promised that they will form some kind commitee to ensure the future of the Xen hypervisor but I think that will come out as the equivalent of the enastetic just before they amputate one of your arms... The actual withdrawl of XenSource from the development of Xen will of course take some time and will be very gradually but in the end I think it wil happend. The blunt short version of what I'm thinking? Citrix just helped Microsoft by gaining the control of one of the biggest investors in one of the competitors to Viridian: Xen. The only thing that really bothers me is the price Citrix paid for XenSource. I am by no means a Fortune 100 CFO but to me 500 million dollars for a company that barely made 5 million dollars last year sounds like a whole lot. Perhaps Citrix needed to scare away other potential XenSource buyers. Perhaps Microsoft chipped in using some exotic solution. Who knows? I do know that if Citrix manages to pull of the “Presentation Server trick” with Viridian then these 500 million dollars could be the best money they ever spent. Al though there's quite a lot of my speculation in this article, I do think this is the strategy that Citrix (and Microsoft) have in mind. If this is not what they are planning, then I think they at least should give this strategy a chance ;-) Time will tell…
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