Citrix Systems has acquired server virtualizaton start-up XenSource for the astonishing sum of $500m - a move reported yesterday by The Register. The deal gives Citrix an immediate in with the server and desktop slicing set. In addition, it lends XenSource the serious financial muscle needed to compete with market leader VMware …
Well, if VMWare's IPO is anything to measure with, Citrix got themselves a deal - if 9% of VMWare is worth a billion, then in a year Citrix may be able to get quite a bit for a piece of XenSource.
I'm surprised that Microsoft didn't make a bid for Xen: although it makes sense for Citrix to get a captive development house that fits their product line (like Google did with PeakStream) more so than Microsoft, which already has a virtualization product. Or (more likely) $0.5B is below the threshold that Microsoft can spend. Now that Citrix has Xen, maybe buying Citrix itself is closer to Microsoft's price range (say $2B?).
We shall see...
To me this is one of the most interesting purchases of the year.
It brings relative veteran VMWare, which is starting to make money out of the presently monopolised VM market, against Microsoft, which does't care about making money out of VM per se (they'd rather have the Windows licenses thank you very much), against Citrix, who now have an immature but potentially very capable product.
For the immediate future Citrix must be willing to cash in (at best) on the potentially lucrative SME VM marketplace where VMWare are relatively weak, whilst they plough money into R&D for the enterprise level developments.
Microsoft will be starting to understand what they have to do to compete in the marketplace with the release of Longhorn SP1 in order to avert some of the takeup of heterogeneous VM technologies. What, run Linux _and_ Windows on one server?
VMWare in the meantime will be starting to realise that they need to strengthen their current foundations for a fight in around 12 months time as the other players attempt to gain some market share.
I can't predict the outcome but the game is on.
After listening to one of the ZenSource folks give a talk and answering a few of my questions. I fully expect all the proprietory bits and bobs to be re-coded by open source people in the next few years.
I find the windows/microsoft link to be strange and weird considering that Microsoft watches it's partners dance for breakfast and then eats them or kills them for lunch. Oh well lets hope Critix will drive Xen into the ground quickly enough for an effective fork.
Is anybody worried by this?
Re: Martin Owens wrote "lets hope Critix will drive Xen into the ground quickly enough " - what on Earth does he mean?
In the interests of open competition I would have thought the last thing the market needs is for a formerly open-source vendor to be transmogrified into a second (or would that be third?) proprietary solution vendor. VMWare is as closed with its code as M$, the great attraction with XenSource is (now 'was'?) its open source code base.
In his announcement letter to partners and customers, Peter J Levine, CEO & Pres XenSource writes: "Citrix shares our commitment that our contributions to open source Xen continue strongly, with the community flourishing transparently without the constraints of commercial software development. To achieve this, we will develop procedures in the near future for independent oversight of the Xen project."
Fine sentiments, indeed, I just worry how long the Citrix Board holds to this shared commitment once the revenue starts flooding in.