Citrix said Wednesday that it will acquire privately held XenSource for $500 million in cash and stock in what's likely to be the beginning of a virtualization land grab.
The purchase of XenSource is interesting since it puts Citrix into the virtualization market. Meanwhile, Citrix can combine XenSource with its thin-client and application delivery software. You can expect more virtualization acquisitions on the heels of VMware's IPO. In addition, companies like Red Hat are including virtualization into its operating system. Some analysts also noted that Citrix needed to get into the virtualization market.
Simply put, be prepared for the virtualization land grab.
XenSource provides virtualization software built on the open source Xen hypervisor. XenSource just released the latest version of its XenEnterprise software.
Citrix said the acquisition will close in the fourth quarter.
Upon close of the acquisition, the XenSource team and products will form the core of the new Virtualization & Management Division of Citrix dedicated to building and growing these important new businesses. Peter Levine, XenSource, CEO, will lead the new division, reporting directly to Mark Templeton, Citrix President and CEO. Under Peter's leadership, Citrix is also committed to maintaining and growing its support for the Xen open source community, led by XenSource co-founder and Xen project leader, Ian Pratt. Between now and the close of the acquisition, XenSource will work with the key contributors to the Xen project to develop procedures for independent oversight of the project, ensuring that it continues to operate with full transparency, fairness and vendor neutrality - principles that are critical to the continued role of Xen as a freely available open source industry standard for virtualization.
Another notable point: Citrix talked up its "strong partnership with Microsoft" and XenSource's partnership.
As an independent company, XenSource has built a strategic relationship with Microsoft designed to ensure broad interoperability between XenSource products and the upcoming Microsoft Windows hypervisor, code named "Viridian". This relationship complements and broadens the successful partnership between Citrix and Microsoft in the Windows application delivery, application networking and branch office infrastructure markets.
And the real kicker: Citrix even quoted Bob Muglia, senior vice president of Microsoft's server and tools business.
The game plan for Citrix is to use its large channel presence to distribute XenSource. Citrix is well established in the channel with 5,000 partners.
Citrix also talked up the desktop possibilities:
At the desktop, the combination of Citrix and XenSource will help make the emerging market for virtual desktop delivery a mainstream reality. Industry experts estimate that up to 30 million office workers will move to virtual desktops over the next five years, creating a new $1 billion market for desktop virtualization. While much of the underlying technology to realize this vision exists today, the available solutions are still far too complex and expensive for most customers to assemble, integrate and manage. By combining the capabilities of XenEnterprise v4 with the newly-released Citrix Desktop Server, Citrix will be able to provide customers with a comprehensive set of desktop delivery solutions that offer unparalleled economics, ease-of-use and end user experience. Citrix further intends to enhance this strategy by incorporating other relevant application delivery infrastructure technologies such as Citrix EdgeSight end user experience monitoring, Citrix Access Gateway for secure application access, Citrix WANScaler for accelerated delivery to branch office users, Citrix GoToAssist for remote desktop support and the OS-streaming and provisioning capabilities from its recent Ardence acquisition.
That's a mouthful, but you can see how the pieces go together.
The acquisition of XenSource is the latest in a bevy of purchases for Citrix. In the last two years, Citrix as acquired Ardence, Refectent Software, Orbital Data, NetScaler and Teros.