Citrix announced yesterday the acquisition of XenSource, the company that commercializes the open source Xen virtualization software. The deal will let it incorporate Xen into its own proprietary commercial products. In theory the combination is a great idea, but in practice, Citrix will likely remain a niche player in the shadow of Microsoft.
First, the great idea part. Imagine logging into a multi-user Windows-based terminal server, and instead of just getting a new session you get a brand new virtual machine all to yourself. The virtual machine can be discarded when you log out, which eliminates a whole bunch of problems with spyware and other "gunk" that clogs up Windows and makes it run slower and slower over time. Each virtual machine is extremely well isolated from others on the same physical hardware, so you could crash, replace vital system files, heck, you could probably even reformat the hard drive and do no lasting harm. Long term, I see this technology eventually trickling down to ordinary home desktops, to protect users from themselves and the malicious or just buggy software that they run.
But that's the problem. This technology is just too good for Microsoft to let a third party rule it. Microsoft already has plans for its own virtualization software code named "Viridian". They already have the technology for supporting multiple users on one box (which they originally got from Citrix by the way). There's no reason why they can't match every basic feature that Citrix/XenSource will provide and you know what? They'll just give it away as part of the operating system.
As they do now with products like Citrix Presentation Server, Citrix will undoubtedly provide features that Microsoft does not. And those features will appeal to some customers, who will be willing to pay extra for it. However the vast majority of potential customers will be happy with the "free" features that Microsoft will provide, and not see the need to go beyond them.