Citrix: XenSource fills hole in product portfolio

Pending purchase will equip Citrix's application delivery infrastructure products with virtualization technologies

Citrix's announcement that it would acquire XenSource demonstrates the company's plans to support the most relevant application delivery technologies possible, company officials say. The software, according to Citrix Chief Strategy Officer Wes Wasson, will not only enhance Citrix's desktop and server products, but also be put to use in the company's application-networking tools also acquired with NetScaler and Orbital Data. Network World Senior Editor Denise Dubie talked with Wasson yesterday to learn more about why Citrix made this move now and what it means to corporate IT customers.

What would you say is the most significant angle of this acquisition for enterprise IT executives?

At the very highest level, there is something really simple that I haven't seen in my career watching IT. If you go to IT leaders, CIOs and vice presidents of infrastructure and the like, and ask them what their top priorities are today, and they will say making IT more responsive to business and more agile and relevant to the business. That is very different than what you saw three or four years ago. What XenSource injects into Citrix that benefits customers is agility. This is not about consolidation for cost savings; this is about agility.

It will make it so you can make all the components of your infrastructure dynamically interchangeable and you don't have to hard-code apps to servers to hardware to processors to user etc. Customers will have an ability to build an infrastructure one time that can take any kind of change. If your infrastructure is not really, really flexible and able to change on the fly every time a user changes of an app changes, you can't survive going forward. That is how I would articulate the deal.

Why does acquiring XenSource make sense to Citrix right now?

We believe that virtualization as an enabling technology to really make the entire IT infrastructure far more dynamic and agile and the ability to move around the various components parts of applications is going to be hugely important aspect of IT infrastructure going forward. We see it as a key component of application delivery. Our whole vision at Citrix is about providing infrastructure to customers that can deliver any kind of applications in any kind of condition in a very dynamic and volatile world with great performance, great security and great cost savings. That is point number one. We believe this technology is a key enabling part of that. There are very few of these assets out there because this is deep science. And if it were not, you would see 40 companies out there trying to compete for it because it is such a hot space.

Secondly, we believe -- based on many conversations with our customers and channel partners and frankly big industry partners over the past year or so -- we have had a huge number of them asking Citrix to get into this space because they see a great fit on that side. It's really interesting as we look out externally for things for us that are seen as very tight strategic fit on that side. It makes huge amount of sense to our customers and partners.

We always have internal projects, acquisitions, licensing and a lot of options, but the biggest thing that drives timing is looking out at markets and when we think things are going to evolve. When we look at where the desktop virtualization is going and what is going to happen on server virtualization side, we just believe the time is now.

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Where do you see XenSource technology fitting in with Citrix? What are some of the first logical integration points?

All the things on the server-virtualization side we see as very, very relevant to the back-end side of applications so that business will continue exactly as XenSource has been doing -- just kind of on rocket fuel. In terms of new integration and synergy with existing Citrix products, we very much see this opportunity in the desktop virtualization market. We think it's a $30 million to $40 million user market in the next three to four years.

But the key thing that has to happen is that desktop virtualization has got to get easier and more economical, and you have to put a premium on user experience. If you take a desktop operating system and you put it on a virtual machine in a data center, you haven't solved any problem, because you haven't delivered it to a user, and there is no user experience. It just isn't going to work. We think by driving these two together, integrating and combining the Xen technology with the Citrix Desktop Server product, which includes our operating-systems streaming and our virtual desktop system, will actually provide a great user experience.

The third thing I would point out, that even on the core Windows application-delivery space with our Presentation Server product line, which in itself represents 10% of the complete Windows Server workload worldwide today according to numbers from Microsoft. The ability to put the Presentation Server infrastructure itself on a virtual platform with the Xen enterprise technology offers a great fit that our channel partners and customers are just going to eat up. That's a bit more tactical but it is a huge opportunity we see.

What is a realistic timeline for Citrix customers to start seeing the XenSource technology integrations?

XenSource just came out as an independent company with its new 4.0 enterprise product. The have 350 channel partners today, and 650 customers. And almost all their partners are Citrix partners as well, so Citrix interested in the products today can go out get them today and download XenExpress for free to get their feet wet with it. In terms of the combined company, we expect to close the transaction in mid-Q4. We have our major partner and sales kickoff event each year in the first quarter, January or February so you can expect to see us sharing more details at the Citrix iForum event at the end of October. We may not have closed the deal by then but we will be talking about new stuff. Then at our annual event, we will be talking about what's new for the year. Those would be the next steps.

How does Xen technology change the competitive landscape for Citrix?

When you think about what Citrix has done over the past four years or so, we quietly built close to a US$1 billion company. And then in the past three years we kind of went on a tear from one product to a complete end-to-end infrastructure. As that has happened, every quarter and year Citrix has become more and more relevant and started showing up on more CIOs top-10 lists. I think the biggest thing it's done is not so much a competitive issue as Citrix has now increasingly going to be seen as one of the top five or 10 leading infrastructure players by every midsize to large enterprise company on the planet. So that is one thing, which means we are just playing in a different crowd.

The second thing that happens is that there will certainly be a relationship with Microsoft that will be enhance by this. That is a key part of the acquisition choice. What XenSource did with their hypervisor and the Microsoft Veridian hypervisor that's coming out next year is almost exactly the same approach that Citrix did 10 plus years ago with its Windows Terminal Services and Presentation Server business. I think that the Microsoft relationship gets better. And there may be more 'coopetition' with someone like a VMware. We are partners with them, they are going to exhibiting at our event in October and we're exhibiting at VMWorld, so we are still going to be partners because big infrastructure players play well together and are in multiple accounts. But there is certainly going to be more overlap with the core VMware business than there was in the past.

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Considering the multiple acquisitions that Citrix has completed in the past few years (NetScaler, Orbital Data, Ardence, Reflectent Software and Teros, to name a few), what is Citrix's end goal and how do these technologies all relate?

We don't have time to walk through this all here today, but there is a clear strategy. Here is a couple of ways to think about. We see our business -- and this has been unchanged for the past several years -- as application-delivery infrastructure. We see this as what is the infrastructure needed along the line of sight between the data center where the apps live and an end user, wherever that user is. What is the infrastructure needed at the front door of a data center to initiate the delivery of an application, at the secure access point where users come in and get access to application, at the front door of the branch where more than half the users access their apps and all the way out to the end where the users live. If you think about our product line, Presentation Server or NetScaler, it's the same exact thing, one is for Web apps and one is for Windows apps, but they do the same thing. The key piece XenSource brings to all of this is an underpinning to all of it. If you have more virtualization baked into the core infrastructure, then you get an entire infrastructure in which these pieces can be moved around in a much more agile fashion.

What would be a next technology step for Citrix?

Our strategy can be articulated as follow the users, follow the apps. You can look at VMware and F5 and Riverbed and Cisco, and that's interesting, and you might pick up some clues. But if you look at the bigger trends like where are application going or where users are going. Things like mobility, offshoring, outsourcing, globalization, software-as-a-service, service-oriented architecture and XML will give you a much better shot of predicting what types of things we think will be needed in the infrastructure to enable that vision for customers.

What is Citrix's position on the open source angle of XenSource technology?

We find open source very appealing. You want to start supporting all of these virtual environments; you have hundreds of device drivers and things like that to support. We have the entire open source community with IBM, HP, Intel and AMD pouring a ton of effort into this so we can do this on almost no investment. If you do it in a proprietary world, you got to have hundreds of engineers constantly on top of those kinds of thing. It gives us huge leverage. We also are very committed to moving the oversight of Xen open source organization to more of a board of advisers that includes the big contributors to the project. XenSource had that planned already. And in order of contribution, obviously XenSource is a huge contributor. But also HP, IBM, Intel, AMD, it's all the big infrastructure players that contribute to this community.

How does acquisition relate to Citrix's application networking technologies, such as application acceleration and WAN optimization?

Today the news is going to be dominated by Windows-type capabilities because the immediate, predominant, hot use-case scenario for virtualization is for delivering Windows applications and virtualizing Windows servers and things like that. We are more committed than ever to continue to invest in the application networking space, especially as more and more applications move to the Web. The ability of Citrix to own the core assets of some of the best virtualization capabilities in the industry and use it creatively in our networking products is going to bring some great advantages there as well. We are not talking about that a lot today, but it's another area in which we can offer our customers great capabilities.