A few months ago I wrote an article detailing how Citrix CEO's decision to buy XenSource was one of the greatest moves in IT history. In that article I also threw out a teaser stating that I thought Microsoft would announce they would buy Citrix a day or two before VMware's VMworld conference. Well, it is a few days before VMworld and I must admit I was starting to think I would have to write that there would be no deal and to eat a bit of crow, but today my inbox lit up with rumors. I even heard the rumor on my favorite podcast, Tech 5 with John C. Dvorak. (Dvorak has been doing IT news for over 30 years, this guy does not report on silly rumors)
This being said, why do I believe this might be true and what are the rumors telling me?
Well, those are my reasons. I said it publicly on June 5th and now I'm saying it again. In many ways I hope I'm wrong so if you don't mind, let me explain why I hope this does NOT happen.
Will Microsoft treat the channel the same way? My answer to this question has to be no. I'm not saying Microsoft treats their channel poorly, just that Citrix did a really great job with it. I'm also a person who loves to look back through history to tell me the future. I just need to look back at the Softricity acquisition a few years ago to see how it affected the Softricity channel. It was not good. In fact there is no longer a Softricity channel... But, there sure are a lot more App-V (Softricity SoftGrid) engineers out there, so if you're a channel partner this might not be good for you but if you're an engineer, don't stop your Citrix training anytime soon...
Last but not least I have to ask myself will this open up a space for companies like Ericom and Provision Networks as an alternative to Microsoft? I have to believe that those people who "hate" Microsoft, for whatever out of control reason, will use a non Citrix (Microsoft) solution to provide access to the Windows based applications they need. Not to mention that it would be interesting to see how the open-source world thinks about the XEN hypervisor being owned (sponsored) by Microsoft.... Heck, Red Hat your 107 million acquisition of Qumranet might be an even better buy than you imagined.
The bottom line is simple, I went on a limb and said it would happen, I thought I might have spoken too soon but we only need to wait a few more days, at tops, to find out and even then it might still happen. We will have to wait and see... I will be happy to eat crow as I love being wrong on this one... ;)
(p.s. or the bottom line is that Citrix is losing their shirts and all the cut backs and layoffs are due to little to no XenServer sales and declining XenApp sales.... But that is a topic or another article...)
i think that move is a move which is very unlikely, i just can not see it happening, they have to much self pride in their products, I mean they dragged MSN through the world only to disapoint for years and years so i think they will do the same with their attempt at virtualisation, hopefully it turns out to be a great product.
posted by Guest - 09/16/2008RE: Fail ? - Epic Fail» reply
posted by Guest - 09/23/2008RE: Citrix XenServer is mature? - You are completely and utterly wrong. Did you do any looking at XenServer 5, or even XenServer 4 before posting these comments? They do have a console and by design it is similar to VirtualCenter because Citrix knows most sysadmins have used VC and they wanted to make it feel comfortable and familiar. Further, the console is replicated among all XenServers so you don't have a single point of failure like VC and scalability issues. (Watch the VC database when you have performance metrics running on dozens or hundreds of ESX servers.) "No equivalent of VDI" Seriously? XenServer and Desktop can do everything that VDI can do and far better; it can provide a traditional VM or stream an OS to a desktop.» reply
You are completely and utterly wrong. Did you do any looking at XenServer 5, or even XenServer 4 before posting these comments?
They do have a console and by design it is similar to VirtualCenter because Citrix knows most sysadmins have used VC and they wanted to make it feel comfortable and familiar. Further, the console is replicated among all XenServers so you don't have a single point of failure like VC and scalability issues. (Watch the VC database when you have performance metrics running on dozens or hundreds of ESX servers.)
"No equivalent of VDI"
Seriously? XenServer and Desktop can do everything that VDI can do and far better; it can provide a traditional VM or stream an OS to a desktop.
As a former Citrix ermployeee and a long time Citrix reseller, this is the best thing that could happen to the Citrix technologies. Citrix is one of the worst managed technology companies in the world. Citrix is a very conservative technoogy company because every one there is so afraid of screwing up. That flows down from the very top. Managers and directors at Citrix are much more concerned about playing politics and getting more power than doing what is right for the company or customer. All those former Andersen consultants are very good at those games. This does not inspire empoyees to work hard or be creative. It usually leads to ass kissing and back stabbing.
Unlike many other tech companies, Citrix never has enough engineers. This is because there is no CTO to push for investment in developers. Kruger wasnt the best CTO in the world but he did push for more and more engineers. Now the push is for more and more sales people instead of engineers. Citrix lost its best edge when Ed I left.
Despite all this, there is some great technoogy at Citrix. CPS, NetScaler and WanScaler are excellent products. None of them get the engineering investment needed. Hopefully it MS or some other company buy Citrix, a real investment will be made it those technologies and the management will improve. it certainly cannot get worse.
Now I'm no financial wizard, but couldn't MS simply snap up51% of outstanding shares and use that to reject any tender offers from the likes of HP, IBM, Cisco?
I mean 1/2 of outstnding shares would cost roughly $2.7B, which is pocket change for MSFT.
posted by Guest - 09/12/2008RE: RE: Microsoft to acquire Citrix? - Cisco was also exclusively featured at Synergy on stage in an executive roundtable that included Citrix, Microsoft, & CSC.» reply
I don't think it will happen. But if it does, maybe we can experience the joy of yet another name change. How about:
1) Microsoft Terminal Services Server with advanced Presentation XenApp
2) Microsoft Metaframe Terminal Services for Citrix Technologies
3) Citrix Terminal Services presented by Microsoft
4) XenApp Terminal Services with .....blah blah blah
You know, some god aweful name like "System Center Operation Manager".
Oh yeah, and the new name for the Citrix client...what is it? Oh yeah, “XenApp Plugin for Hosted Apps”? WTF kind of name is that? Why even change it. What POSSIBLE benefit could there be from changing the name from "client" to "plugin for hosted apps".
Great post Doug with some buzzing responses already, especially the one above.
There are other alternatives to putting a stop to the likes of HP, Cisco etc buying Citrix rather than just buying the whole company I think, but yeah I can see why they would want to make sure that a) they are the no 1 partner OR b) they own the company.
Also, if this was to happen wouldn't there be some sort of indication that it was about to happen in the global financial market place? Or would I wake up in the morning to find that I was booked in somewhere to implement Microsoft XenApp?
Keep up the good work!
Lee
Why would Microsoft want to buy Citrix and break a money making machine for them. Each time Citrix sells a XenApp solution Microsoft sells hundred of TS Cals and untold numbers of Server Licenses without lifting a finger. It makes no sense for them to buy and manage this cash stream. No stop the rumors, it's unprofessional.
posted by Guest - 09/12/2008RE: Microsoft Sells Licenses Without Doing Anything - Oh Man, it is not about the age old answer. If Microsoft buys Citrix it has to do with nothing more that Microsoft preventing someone else from buying Citrix. It is that simple. Microsoft would rather not buy them, I would imagine. Although if HP, Cisco, or anyone else tries to buy them then Microsoft has first right of refusal and would pick them up. IMHO. I agree about the old Citrix line, "every dollar we make Microsoft makes two..." I worked there so I know the pitch man... This is different... Again, I think Microsoft would only buy them if they have to. Doug » replyposted by Guest - 09/12/2008RE: RE: Microsoft Sells Licenses Without Doing Anything - If Microsoft buys Citrix they will still sell a TS cal, server license, or desktop license. That will not change. But, after buying them they would also make money on the products a Citrix acquisition would bring to the table. Microsoft does not have a connection broker for their solution. They need one desperately if they are to compete against VMware. But if Citrix is bought by HP, Cisco, or IBM, what would stop them from supporting Linux as a desktop or server platform for VDI and terminal servers? That is something Microsoft would not be happy about. So if they have to spend $1 billion to protect that monopoly it would be a wise investments to protect their 10's of billions in annual revenue.» reply
Oh Man, it is not about the age old answer. If Microsoft buys Citrix it has to do with nothing more that Microsoft preventing someone else from buying Citrix. It is that simple. Microsoft would rather not buy them, I would imagine. Although if HP, Cisco, or anyone else tries to buy them then Microsoft has first right of refusal and would pick them up. IMHO. I agree about the old Citrix line, "every dollar we make Microsoft makes two..." I worked there so I know the pitch man... This is different...
Again, I think Microsoft would only buy them if they have to.
posted by Guest - 09/12/2008RE: RE: Microsoft Sells Licenses Without Doing Anything - If Microsoft buys Citrix they will still sell a TS cal, server license, or desktop license. That will not change. But, after buying them they would also make money on the products a Citrix acquisition would bring to the table. Microsoft does not have a connection broker for their solution. They need one desperately if they are to compete against VMware. But if Citrix is bought by HP, Cisco, or IBM, what would stop them from supporting Linux as a desktop or server platform for VDI and terminal servers? That is something Microsoft would not be happy about. So if they have to spend $1 billion to protect that monopoly it would be a wise investments to protect their 10's of billions in annual revenue.» reply
If Microsoft buys Citrix they will still sell a TS cal, server license, or desktop license. That will not change. But, after buying them they would also make money on the products a Citrix acquisition would bring to the table. Microsoft does not have a connection broker for their solution. They need one desperately if they are to compete against VMware.
But if Citrix is bought by HP, Cisco, or IBM, what would stop them from supporting Linux as a desktop or server platform for VDI and terminal servers? That is something Microsoft would not be happy about. So if they have to spend $1 billion to protect that monopoly it would be a wise investments to protect their 10's of billions in annual revenue.
Doug-
First, MSFT can't "Buy" Citrix - CTXS is a publicly traded company. They can tender an offer, and work through the Citrix board to try and make it happen (think Yahoo!). It's not as simple as the acquisition of privately held firm like Kidaro, Calista, and/or Softricity. It's semantics, but it's an important point - one that I personally don't think will happen
But let's go down that road anyway . . . .
Today Citrix has a $5.1B market cap. They are a solid company with a history of profitability in a market they own. If you were going to do a valuation on the company - and I don't have time to do that - I would guesstimate that you'd need a 30-40% premium to have an offer accepted by the board. So figure MSFT would need to offer $6.5-7.5B for the company. They have a lot of money no doubt, but that's a helluva chunk of change.
And what do they get for that?
Presentation Server - ok this is interesting, but they have App-V today. Seems like a LOT of overlap
XenServer - not interesting - they have Hyper-V. Total non-starter.
XenDesktop - so they get a connection broker and some OS streaming technology. Is this worth several billion dollars?
GoToWhatever - totally trivial and non-material, maybe you could integrate this w/ the Live! businesses, but again is this worth several billion dollars?
You mention management expertise? Microsoft has an entire team of engineers working on managing windows environments, there isn't any IP at Citrix that is so compelling that MSFT would need to shell out for it.
Same goes with ICA.
All in all - your analysis is pretty superficial and circumstantial. The cuts in spending etc are due to their lackluster financial performance, not because MSFT is going to acquire them.
The one point you raise that has a bit of credibility is the defensive angle - it might be important enough to keep Citrix out of the hands of some other players - although Microsoft doesn't have a track record of this - if they did they'd buy VMware before Cisco does.
posted by Guest - 09/12/2008RE: You should look at the financials - Will Hyper-V is basically Xen Server. The Xen team camped out at Microsoft for a few years and the underlying technology was based on Xen code......I think it makes sense and clearly the Xen acquisition was Citrix's way to keep acccess to critical OS functions/code. So they of course are very close already, and these are technologies that Microsoft is using, or wants.» replyposted by Guest - 09/12/2008RE: You should look at the financials - Citrix at 6 to 7 billion is better deal than Yahoo at 35 - 40 billion» replyposted by Guest - 09/12/2008RE: RE: You should look at the financials - And peaches taste better than pineapple. . . . what's your point?» replyposted by Guest - 09/11/2008RE: You should look at the financials - well put. I don't think Microsoft would want to buy Citrix at all. I 100% agree. The only reason the would it is in a blocking move, as you agreeed with. BUT, that being said, I do think Citrix is important enough for Microsoft to do it and not because of any of the points you mentioned but because at this point Microsoft needs Citrix to round out their attack on VMware. All that being said, I hope you are right. I'm not really for this. I'm just reporting on 1) what I'm hearing and 2) what I'm seeing.Also, I find it weird that Dvorak reported it. That is what put me over the top and made me want to write this vs. keeping it to my conversations and inside my head.Other than that, great response. I agree! /Doug » reply
Will Hyper-V is basically Xen Server. The Xen team camped out at Microsoft for a few years and the underlying technology was based on Xen code......
I think it makes sense and clearly the Xen acquisition was Citrix's way to keep acccess to critical OS functions/code. So they of course are very close already, and these are technologies that Microsoft is using, or wants.
Citrix at 6 to 7 billion is better deal than Yahoo at 35 - 40 billion
posted by Guest - 09/12/2008RE: RE: You should look at the financials - And peaches taste better than pineapple. . . . what's your point?» reply
well put. I don't think Microsoft would want to buy Citrix at all. I 100% agree. The only reason the would it is in a blocking move, as you agreeed with. BUT, that being said, I do think Citrix is important enough for Microsoft to do it and not because of any of the points you mentioned but because at this point Microsoft needs Citrix to round out their attack on VMware.
All that being said, I hope you are right. I'm not really for this. I'm just reporting on 1) what I'm hearing and 2) what I'm seeing.
Also, I find it weird that Dvorak reported it. That is what put me over the top and made me want to write this vs. keeping it to my conversations and inside my head.
Other than that, great response. I agree!
/Doug
Couple of thoughts:
On the SBC side, between Citrix XenApp and Terminal Services, that's a monopoly of that market
I see MS spinning off all the front-end hardware, which is not good for those of use with WANScalers, NetScalers, etc
Just like the SoftGrid acquisition, concurrent licensing was converted to 'per user' licensing, which does not make sense for remote access solutions. At my location, SoftGrid was used for Terminal Services users, the conversion to 'per user' model was not a cost savings for us, but rather tripled our costs for SoftGrid. Similar license model changes for Citrix would be devastating and would drive shops to consider the alternatives.
I'm not in favor of this marriage.
posted by Guest - 09/11/2008RE: Not sure about this - I agree. It would be horrible for the Citrix community. It would distroy it. I hope it does not happen too.» reply
That would mean the end of ICA. Why keep two protocols?
RDP with a bit of dev can be as good as ICA. And if MS wanted to keep ICA they would not buy Calista.
posted by Guest - 09/11/2008RE: It would only take one minute for Microsoft to kill Citrix or whomever buys them... - I tend to disagree with you. I mean, Microsoft can't just bully people around anymore as the anti-trust stuff mostly stopped that. Microsoft would have to have a pretty good reason to pull those contracts... also, I've heard a lot of those source code things are just not needed anymore and of course companies like HP might already have them in place... Also, can we agree Citrix has been Microsoft's puppit for the past ten years? If not then can we at least agree that Citrix has done mostly what Microsoft wants? If so then we have to ask ourselves, does Microsoft think they can tell companies like HP, Cisco, and/or IBM what to do the way they tell Citrix? I think the answer is no and hence why Microsoft will need to stop anyone buying Citrix other than themselves.../Doug » replyposted by Guest - 09/11/2008RE: RE: It would only take one minute for Microsoft to kill Citrix or whomever buys them... - " If so then we have to ask ourselves, does Microsoft think they can tell companies like HP, Cisco, and/or IBM what to do the way they tell Citrix?"Because Citrix depends on MS for Terminal Services for survival, unlike HP, IBM, etc. So allot of suck up is in order, especially to get the latest features in XenApp to be supported in the base code of Terminal Services» reply
I tend to disagree with you. I mean, Microsoft can't just bully people around anymore as the anti-trust stuff mostly stopped that. Microsoft would have to have a pretty good reason to pull those contracts... also, I've heard a lot of those source code things are just not needed anymore and of course companies like HP might already have them in place...
Also, can we agree Citrix has been Microsoft's puppit for the past ten years? If not then can we at least agree that Citrix has done mostly what Microsoft wants? If so then we have to ask ourselves, does Microsoft think they can tell companies like HP, Cisco, and/or IBM what to do the way they tell Citrix? I think the answer is no and hence why Microsoft will need to stop anyone buying Citrix other than themselves...
posted by Guest - 09/11/2008RE: RE: It would only take one minute for Microsoft to kill Citrix or whomever buys them... - " If so then we have to ask ourselves, does Microsoft think they can tell companies like HP, Cisco, and/or IBM what to do the way they tell Citrix?"Because Citrix depends on MS for Terminal Services for survival, unlike HP, IBM, etc. So allot of suck up is in order, especially to get the latest features in XenApp to be supported in the base code of Terminal Services» reply
" If so then we have to ask ourselves, does Microsoft think they can tell companies like HP, Cisco, and/or IBM what to do the way they tell Citrix?"
Because Citrix depends on MS for Terminal Services for survival, unlike HP, IBM, etc. So allot of suck up is in order, especially to get the latest features in XenApp to be supported in the base code of Terminal Services
posted by Guest - 09/11/2008RE: Wrong link - thank you. I fixed the link... » reply
