Suggestions that Microsoft could hijack the agreement for Citrix Systems to buy XenSource with a higher bid are likely to be wide of the mark, judging by comments made recently by those close to the deal.

Citrix agreed to buy XenSource last week in a $500m agreement that will give it a say in the burgeoning market for server virtualisation and delivering datacentre-hosted desktop environments.

However, a report in merger-and-acquisition web site The Deal yesterday suggested that Microsoft could spring a surprise by counter-bidding for XenSource. The Deal cited Global Equities Research analyst Trip Chowdhry as saying, “It is quite likely that Microsoft may put in a competing bid on XenSource to the level of $1bn. And I would say if Microsoft puts in a bid, IBM won't stand still.”

Chowdhry is quoted as saying that the reason for Microsoft’s interest relate to Microsoft’s “total failure” in virtualisation.

However, any bid for XenSource would require a major U-turn on behalf of Microsoft as the company was quoted in the press release for the Citrix-XenSource agreement. There, Microsoft vice president Bob Muglia said, “Citrix and XenSource have long been strong partners for Microsoft and it is exciting to see them team up to help move the market forward.”

Also, although Microsoft has delayed its Viridian virtualisation hypervisor and changed the product’s feature set, that product is probably too far down its development road to be pulled now. Microsoft’s current schedule has it releasing Viridian within 180 days of Windows Server 2008, which is itself expected early in 2008.

In a 30 July meeting with IT Week, XenSource chief technology officer Simon Crosby and international vice president John Glendenning insisted they enjoyed a close collaboration with Microsoft but there was no plan to go beyond current interoperability arrangements.

Citrix declined to comment and Microsoft and XenSource were unavailable for immediate comment.

Read the original, here.