Citrix announced today that they were buying virtualization vendor XenSource for $500M. I wrote a detailed analysis of what this means when I first reported this news last Thursday in my article "Should Citrix buy a hypervisor?" In this article, I'll share a few more thoughts that have emerged since then.
First, $500M is a VERY expensive price to pay for XenSource. XenSource was a private company, but the general belief is that they had less than $5M in revenue (with some people saying less than $1M).
The Citrix press release says that with this acquisition, Citrix will jump head-on into the server and desktop virtualization markets, and that they expect to grow to a nearly $5B company in the next four years!
The press release also reiterates a lot of what I wrote about last week with regards to strengthening the relationship with Microsoft, but everything that I've heard is that Microsoft is not happy about this. Again, now Citrix is going head-to-head with Microsoft in this market.
The whole XenSource thing is a little strange because XenSource's technology is based on the open-source Xen hypervisor. So Citrix will not own the IP of the core hypervisor. (What exactly did they just pay $500M for?)
XenSource hosted an Analysts Day meeting a while back, and Citrix presented this presentation about how Citrix + XenSource fit together. Most of it was the typical Citrix marketing stuff, but there are a few slides about how "virtualization technologies enable the dynamic coupling of components for best delivery." Specifically, they write that Citrix Desktop Server can deliver Windows desktops via XenEnterprise VMs, and that XenSource is working on a XenEnterprise VM utility for Desktop Server. They mention that they're also exploring how Ardence OS streaming fits into all of this.
So what happens next? Will people love this or hate this? Can Citrix hit $5B in four years? What will VMware and Microsoft think? What stupid name will Citrix give these new products? What will the open source community think?