Now that Dell bought Wyse/Quest, it's time for HP to buy Citrix and Cisco to buy EMC/VMware

There's a classic Onion article "Just Six Corporations Remain." In the IT world, there's talk about how we're going to see more mega-consolidation into a few super companies.

There's a classic Onion article "Just Six Corporations Remain." In the IT world, there's talk about how we're going to see more mega-consolidation into a few super companies. On yesterday's Brian & Gabe LIVE show, we talked about the potential that Dell had if they created some kind of super offering by combining Quest vWorkspace, Wyse TCX, PocketCloud, and VDA, the MDM & MAM products, ChangeBASE, KACE, SonicWALL, and all the other products they have. If that actually happened, what would that mean for the other desktop & application delivery companies, and what would it mean for the other huge IT vendors?

Maybe it means that HP should just finally buy Citrix, (something that's been rumored for years). That would allow them to go head-to-head with Dell for application and workspace delivery too.

If that happens, then it probably makes sense for Cisco to get together with VMware (and EMC). I don't understand how acquisitions work from the financial standpoint. VMware & EMC's combined market cap is almost as big as Cisco's, so maybe they'd have to merge. But putting all them together would be a strong counter to Dell and HP.

To me this seems like a question of "when," not "if." What do you think?

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I was wondering if this was going to be a catalyst for the "somebody's buying Citrix" speculation.  They wouldn't be a cheap acquisition target, so the biggest question would be whether it would provide HP with the means to grow their business in a way that they would otherwise be unable to do through organic growth.  HP is #2 in the thin client space, right behind Wyse (now Dell).  That's not insignificant.  Sure, thin clients are only a small (probably less than 10%) of the endpoint market, but it's pretty clear that thin client sales are very closely tied to server sales.  The next question is whether it would give HP an edge in building a desktop virtualization offering.  The largest value in either app or desktop virtualization would be the ownership of ICA, and of course how the collaborative and technology licensing agreement that Citrix has with Microsoft would play into things.      


I still have some reservations about how the Dell acquisitions will all play out into market offerings, and how much they will actually sell, implement, and service.  Keep in mind that Dell has some pretty big contracts with education and government customers, which HP may have to act on to compete with.


The other question is how much of an impact consumerization, cloud computing, and other factors will influence the market.  Dell's potential "super-offering" would seem to hinge heavily on desktop virtualization, which we all know is a hotly debated topic.  I think it would almost have to be whether acquisitions help these companies to advance their cloud and enterprise post-PC strategies that will determine when (or if) these mergers will come to fruition.  


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The Workspace BU for Quest is small maybe 10-20% revenue of total revenue. Dell acquired Quest for it's other product lines. The Management and Migration tools. They will do something with the Workspace BU but that should not scare other organizations to acquire Citrix.


But time will tell.


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The issue with acquiring Citrix or VMware is that both these companies are too big.


If you look at the size of acquisition by Dell, HP, and Cisco in the last 10 years, you don't see many or any over $10bil.


Given Citrix's marketcap on Jul 11 is $14bil, a 30% premium would be about $18bil. I don't think HP has the appetite for that, especially given the still unsettled fiasco with Autonomy.


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If anything it should be Cisco buying Citrix.  


Cisco has about $45B in cash reserves, not enough to buy VMware but more than enough to go after Citrix without paralyzing itself. More importantly, Cisco has the leadership and management strength to integrate Citrix without rocking the boat too much and given Cisco's strategy of buying up companies that generate traffic for its network to move - such a move is not completely far fetched.


That and I know a lot of people at Cisco who would welcome much closer ties to Citrix.


Simon


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@Scott if vWorkspace is only bringing in  10-20% revenue of total revenue...that's pretty huge considering there's 228 products in their portfolio.  I can't imaging them shutting the group down.  A sell off maybe, but I don't see this happening either.


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My Personal Opinion is that HP have lost the plot at the moment and buying Citrix will not go anyway near far enough to restore the balance with Dell, in fact I would cast doubt on whether or not they could find that kind of cash after the laughable bad purchase of 3Par last year.


If you look at good Business moves and technology assets now owned DELL is doing the best by far in the VDI sector especially when you count that they now own Compellent a Virtual storage provider “on SAN IOP offloading any one”, Force 10 “10 & 40GB unified networking for all”, & they also look to of brought in the C series in from somewhere allowing them to offer individual high density standalone with Graphics HBA capacity “MS Licensing Daas work around?”.


I would agree that Cisco now needs to buy a storage provider but would expect EMC will cost too much for what is not really there core market sector and they are old enough and big enough to be able to buy a lower ranking cheaper start up style company and grow it in house using OMEX instead of CAPEX to pay for it.


Another interesting development that may spring up off the back of Hyper-v 3.0 is that Network vendors will start offering virtual Appliances “like the Cisco 1000v” and as software is cheap Vs Hardware we may start to see vendors that you would never normally associate with the VDI market becoming fairly strong players in it “Cough Juniper”.


I will say I am not tied to or support any specific vendor and any comments made are based on my own opinions.


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