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Citrix preaches 'second mover advantage' over VMware

In August, Citrix dug deep and found $500m to acquire XenSource – a company expected to bring in all of $8m this year, according to our sources. In an instant, this deal transformed Citrix from a very competent, well-paid, niche application streamer to a major player in the most-hyped part of the server and management software markets. People who had no idea what Citrix actually does took notice and wondered how this company will fair against an upstart like VMware and a lumbering giant like Microsoft.

Wes Wasson, Citrix’s Chief Strategy Officer, sees the XenSource buy as the culmination of a multi-year charge. The software maker has acquired companies such as Netscaler, Teros, Reflectent, Orbital Data and Ardence as it looked to build out the bits and pieces that surround its core application delivery technology. With XenSource, Citrix completed this push, adding technology that sits at the very heart of the data center. Now, according to Wasson, Citrix is well poised to continue its mission of becoming a "successful, multi-billion dollar software company."

"We really have been on a three year plan of building that vision out," Wasson told us, during an interview at Citrix's Santa Clara headquarters. "I think what you saw in XenSource is the final piece. If you didn't quite see what we are building over here in the corner, then this acquisition really hit the floodlights on it."

The new kid in town

Citrix claims a number of unique angles in the virtualization game that could give it an edge over the competition.

For one, it has a long history doing virtualization-type things by pushing shared software out from the server room onto users' desktops and making that a tolerable experience. More recently, Citrix rolled out a full-on Windows desktop virtualization product that lets it grab entire desktops and application bundles. Earlier this month, Dell also picked up the technology Citrix acquired from Ardence to let customers manage up to 100 full PC desktops on a server and send out those operating systems and applications via the network.

So, we find Citrix working its virtualization play, primarily with Windows, from the desktop out angle, while the big names in virtualization VMware, Microsoft and XenSource have done more of a server-centered thing so far.

Secondly, Citrix thinks it can engineer some interesting tactics on the pricing front that the server guys might not try.

Wasson declined to offer any specifics on how Citrix would shake up virtualization pricing but did say that the per processor model used by VMware and XenSource historically might not be the company's favored approach. Citrix is intent on "providing customers with things that can be consumed in easier and far more economical ways," according to Wasson. We tend to think that means sending virtualized software out on a per user cost basis rather than metering by the socket. Or perhaps you receive a discount for doing both desktop and server virtualization.

Read the rest of this insightful article from The Register about Citrix and their acquisition of XenSource, here.

Published Saturday, October 20, 2007 12:20 PM by David Marshall
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