Citrix's $500 million buyout of XenSource is a brilliant strategic move that will enable the Ft. Lauderdale, Fl. software company --and its powerful close ally, Microsoft -- to steal market share from virtualization software kingpin VMware.
The deal, announced this week presumably to coincide with VMware's star-studded IPO, essentially unifies two powerful proprietary software companies, and longtime partners, with an open source startup in a triumvirate whose main mission is to establish a second commercially significant virtualization platform. (Microsoft has operated a close technology partnership with Citrix for more than a decade and with XenSource on the design of its own virtualization hypervisor.)
It's also a great business move for Palo Alto, Calif-based XenSource, which oversees the Xen open source project. After all, its long-term pact with Microsoft and marriage to Citrix assures its investors of a strong return on investment, its customers of long term viability, and its company executives of sustained marketing and development funds needed to fight such a formidable opponent as VMware.
But what does it mean for the Xen open source project? Will it die on the vine as open source backers abandon it for Xen alternative KVM, and up-and-coming companies that embrace KVM such as Qumranet? Will Citrix’s commercial interests naturally supercede the open source priorities of XenSource and lead the Xen project to extinction?
Like Microsoft, Citrix has had no involvement with the open source community. This factor alone rattles many bones in the open source community. Yet, XenSource execs insist that Xen will remain independent and will not be "subjugated" as a slave to its proprietary owner.
XenSource CTO Simon Crosby said Citrix CEO Mark Templeton may be late to the game but he is committed to supporting open source development. Crosby also said the creation of a Xen Foundation -- similar to the Linux and Eclipse foundations -- is not out of the question. The decision about how to a protect Xen’s independence and innovation will be left to the project members, not Citrix, and Xen will remain licensed under the GPL, he claims.
“Citrix knows it does not have well known reputation in open source but Citrix believes that this is the right way to deliver innovation,” Crosby told ZDNet. “There will be a creation of project oversight and we’ve had ongoing dialogue with the community even before engaging with Citrix. That ensures there’s no potential of ever been subjugated to a closed source agenda.”
Still, the deal raises serious questions about open source software governance and the long term implications for open source projects as open software becomes melded into the established proprietary software business landscape.
The idealistic notion that Red Hat and other rising stars in the open source world such as JBoss would eradicate Microsoft and other vendors with proprietary software models have not panned out. And as more commercial software vendors acquire open source outfits or like Oracle, launch new open source business models, the potential for the opposite scenario appears more likely.
At LinuxWorld recently, observers mulled the increasing mix of proprietary software and open source software in hybrid stacks and the inevitable mixing of closed and open source vendors in partnerships and transactions, such as the one between Microsoft and XenSource and Microsoft and Novell.
While those deals continue to generate controversy and concern in the community, there has been an undeniable shift in attitude among those steeped in the business of open source software to one of peaceful co-existence with proprietary software vendors. So much so, in fact, that Linux Foundation executive director Jim Zemlin said during his keynote at Linuxworld earlier this month the trend was accelerating and that open source vendors are better off cooperating with Microsoft -- and, inherently, other proprietary software companies -- if they want to succeed.
In any event, such cooperation will have a huge benefit for customers because it means they will not be locked into a single vendor or a single business model. This mixing and matching of (hopefully) interoperable software – closed and open alike – will deliver on the original promise of open source – no vendor lock-in, lowered costs, more competition and choice.
XenSource’s CTO suggested that claims that open source firms – and projects -- will die on the vine if they fail to bond with proprietary software companies. Crosby said only three or four engineers are actively working on Xen development and the infusion of capital from Citrix and expected appointment of several engineers to work on Xen full-time will only help the project flourish rather than fail.
XenSource also makes no apologies for trying to build a successful open source business model. CTO Crosby said the prevalent open source model lends itself to commoditization and competition on services, where there not enough differentiation to generate strong margins, while merging or partnering with proprietary software companies drives more innovation on the product side and commercial success for open source companies, even as it benefits customers.
Still, he understands concerns about the long terms risks of integrating open source companies with proprietary software vendors he doesn’t have the answers. But he thinks not.
“As open source becomes part of the commercial [vendor], does it become threatened? That’s a really good question and it’s the ground we are now seeking to fill in,” he said.
Are proprietary software vendors simply paying big bucks to acquire and then eliminate their open source competition? Are proprietary vendors banding together to pocket the profits of open source innovation and lead open source projects to eventual ruin? Only a highly cynical person would suggest such draconian tactics, but business is business, after all. XenSource and others maintain that Microsoft and Citrix know they must participate in open source or lose their shirts and that deals such as this only confirms how the power of open source has transformed the software industry.
Such a deal is not the first, and not the last. Several consultants I spoke to at LinuxWorld 2007 hinted that a major wave of consolidation in the open source world has begun and said a slew of acquisitions by large proprietary vendors is imminent. Citrix's purchase of XenSource falls into that category. More will follow, especially in the crowed open source management software market, ZDNet was told.
It remains unclear how the merging of open source startups and large proprietary software vendors will impact open source software – and open source projects – long term. The outcome, for customers, vendors, and investors, will be positive if open source projects are supported and protected and powerful software vendors are scrutinized on a regular basis. Beware the Trojan horse.