Everyone needs to calm down about this Elliott thing. Citrix had it coming.

Most of what I hear when I talk to people in the community about Elliott and Citrix isn't good (just check out the comments on Brian's recent articles), and there is a lot of concern over what Elliott has done with other companies in an effort to make a buck. They think the changes are too sweeping, and that this is going to be a good old-fashioned corporate raid.

Most of what I hear when I talk to people in the community about Elliott and Citrix isn’t good (just check out the comments on Brian’s recent articles), and there is a lot of concern over what Elliott has done with other companies in an effort to make a buck. They think the changes are too sweeping, and that this is going to be a good old-fashioned corporate raid. I’ve got news for you, Citrix is a publicly traded company in business to make money above all else, and it is broken. We’ve known for a while that they’ve lost a huge chunk of their seemingly insurmountable lead over VMware in recent years, largely due to product decisions and the loss of key personnel, but it appears they’re broken as a company, too.

Most people seem to fear that Elliott is going come in just long enough to sell off all the things that have any value, prop up the share price, then cash out, leaving a burned out husk of a company. They’re quick to point out that history shows Elliott being associated with companies that have died off while making the shareholders a lot of money, and we all know that Wall Street can be heartless and cold, so why would this play out with Citrix any differently?

Before we get too far, though, let’s back up. Put Elliott aside and ask yourself “What does Citrix do that is really awesome?” The answer most people will say is XenDesktop and XenApp. Others will say NetScaler, but it’s mostly because they’re using it with XenApp and XenDesktop. You’re not likely to hear GoTo, ShareFile, and XenMobile, and you’re definitely not going to hear Podio, ByteMobile, or Cloud.com (or whatever that turned into within Citrix).

Face it–the only thing that Citrix does that’s really awesome is desktop virtualization, yet they have all this other stuff, too.

Now ask yourself about which market Citrix is currently the undisputed leader in.

Awkward silence.

Desktop virtualization, maybe? But VMware...

Maybe they’re the undisputed leader in "social/work blended media platforms for team organization” or whatever segment Podio occupies?

The point is, Citrix does a LOT of stuff, but they no longer have the “undisputed leader” tag on anything they do, especially their bread-and-butter desktop virtualization. Many consultants and customers I talk to believe it to be the better product, but that’s the problem. We have a situation where there is an excellent product in an under-performing company that people can’t identify as the clear cut leader.

That’s where Elliott comes in. I’m reminded of a line from Grosse Pointe Blank, a movie about a hired assassin (John Cusack) who was beginning to feel guilt about his job. He rationalized it this way:

“If I show up at your door, chances are you did something to bring me there.”

As a significant shareholder in Citrix (7.5%—almost 1 billion dollars worth of their stock), they wield a certain power that they aim at protecting their investments and…making money. The approach is pretty common, and they’ve used it before: acquire a significant interest in a broken company, then force change. It sounds like the heavy handed man coming in and pushing out the little guy, but we’re not talking about small companies here. We’re talking about Novell, Compuware, BMC, Hess, and, of course, Citrix.

In each case, Elliott was troubled by a company’s loss of focus on their core competencies. For example, Elliott made an offer to buy Novell, stating that the company "has attempted to diversify away from its legacy division with a series of acquisitions and changes in strategic focus that have largely been unsuccessful.” What of that isn’t 100% true? Elliott offered $5.75 per share for a total of $1 billion, which Novell rejected. To be clear, Elliott didn’t want to get into the software game and run Novell. They wanted to own Novell for just long enough to pare it down and sell it at a profit. Novell rejected the offer, but later sold to Attachmate for $2.2 billion while Elliott was still a shareholder. Mission accomplished.

(Those of you who have paid attention to the struggle of Novell over the years will note that Attachmate was recently acquired for $1.2 billion. Yeah, that was a big loss. But Elliott didn’t do that. Years of playing the hands they were dealt the wrong way by Novell and Attachmate did that. Novell was broken before Elliott got there.)

The proposed “fix” is the same for Citrix as it was for the other companies, too. Elliott wants Citrix to spin off or sell non-core areas of Citrix. These include ByteMobile and GoTo (which already have For Sale signs on them) as well as CloudBridge, CloudPlatform, and NetScaler. This sounds aggressive, but can you honestly say that Citrix is better with them than without?

For the record, I disagree with the notion that NetScaler is not a core product. NetScaler is all but required for any comprehensive XenApp/XenDesktop deployment. To get rid of NetScaler now would leave a void in the features of the platform that would worsen the position of XenApp and XenDesktop in the industry. So while NetScaler has value outside of world of the Xens, Citrix can’t just sell it off without replacing the functionality.

Citrix selling off their non-core assets can focus them on what they do best, and that sounds good to me. I know that a lot of the words thrown around are roundabout ways of saying that people are going to lose their jobs, and that really sucks, but if Citrix were really doing well none of this would be happening. Again, can you honestly say that your opinion of Citrix today is higher than it was five or ten years ago?

Before we get too far ahead of ourselves, though, let’s keep everything in perspective. The current situation has Elliott’s Jesse Cohn taking a seat on the board. That’s a single seat on a ten-person board. Yes, that wields a lot more influence than a typical shareholder, and even more so considering that he will be partly responsible for choosing a new CEO as Mark T retires, but it’s still just one seat. Elliott’s letter and subsequent involvement with the company didn’t put Citrix in the position they’re currently in. The shakeup is in response to to the situation that Citrix put themselves in, just like it was for Novell, Hess, BMC, and Compuware.

You might disagree with the motivation to make money for the shareholders, but that’s what happens when a company goes public. There’s nothing you or I can do about that. Priorities shift from "having the best technology just for the sake of having the best technology while making some scratch on the side" to "having the best technology so that you can sell enough licenses to prop up the revenue just enough to meet forecasts and keep your shareholders happy from quarter to quarter.”

Currently, none of that is happening. So far, Citrix has agreed to sell off ByteMobile and GoTo and is currently looking for buyers. Elliott has agreed not to shake things up for one year, though they will have influence over choosing replacements for two departing board members and Mark Templeton, who is retiring. Think back to the first time Mark T retired—we wanted someone who could guide Citrix into the future, who could shake up a company that was dangerously close to losing its lead. That board ended up sticking with Mark, but this is a new board, and we can expect a new type of CEO.

Whether any of this is good or bad remains to be seen. Citrix trimming away those businesses that don’t fit into core makes a lot of sense and can go a long way towards fixing what made Citrix awesome. Some would say that XenApp and XenDesktop are not technologies for the future, and they’d be right, but in order for Citrix to have a chance they need to reset, get back to what they do best, then figure out the next course of action. So I’ll watch, and I’ll hope that they’re making decisions that are the best for the product and the business.

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I still believe that Citrix Secure Gateway can be updated and maintained if a proxy solution is what a customer wants/needs.


While I do like NetScaler, to deploy it just for the sake of a single instance proxy is a bit overkill, even if using the VPX.


So, if CSG is not killed off and updated to support the future TLS versions and StoreFront, NetScaler can be sold off.


Right? Am I missing something? I mean I get why a NetScaler is required, Citrix wants to sell it, i.e.; to make money.


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I'm happy to see you publish an article like this Gabe, it's about time and Elliott is not wrong, Citrix led themselves here.  The QA in the past 18-24 months on products is horrible, the buck is passed internally all the time, support forums have lots of legit issues of which they never respond too.  I had a NS VPX issue for over 12 months before they admitted it was their fault while dozens of other customers were having the exact same issue.  Mark T should have gone long ago, Citrix has lost their way and needs a new leader.  There is no reason why in the world VMW should be eating their lunch when they clearly have a better solution.  UPM needs to have some money thrown at it and quick as it is lacking some serious feature, profile migration anyone???  Citrix probably could have bought Immidio if they weren't so busy with all that other stuff that brings no real value to the table.  Who really uses Podio???  Supporting multiple hypervisors is awesome and definitely is a leading edge, many K-12 uses HyperV as they get it for free with their M$ licensing so that's an "in" for for Citrix right there.  Moving IMA to FMA, another good move, but executed really poorly, I mean seriously how could you forget the feature disparities that existed, come on!  They've already extended XA support a few times, I'm sure they'll extend it another year as well.  Pushing customers to AppV I don't think was a good move and VMW knows it that's why they are now going after CTX customers with ThinApp.  Also another thing since I'm on a rant is the keynote mentioning products that are either never built or killed off shortly after, anyone remember the huge SOC initiative??  Yeah, I fell for that marketing crap, bought some TC's only to have lots of problems and then for HP to tell me behind closed days, "yea, CTX killed that off, sorry you're screwed"  They need to get back to basics and doing what they do best.  Sure Sumit walked out the door with the blueprint for CWC and VMW has their Enzo crap, however it looks like CTX implementation and roadmap is way better.  VMW has great marketing folks, but when you get down to it, it is an inferior product bundled together with alot of other crap to make it work.  


Citrix please get your Mojo back!  I don't want to move to Horizon


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Gabe,


I applaud your bravery for saying what everyone else is thinking.


The new Citrix should be:


1. XA - they just rock at this


2. PVS - awesome software


3. XD - great software, but not as slick as XA, but please kill MCS


4. Netscaler - King of the ADC's, keep it


5. AppDNA, because I don't have much time to package your apps, this helps TOD greatly.


Come at me bro!


-Josh


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Regarding Stans comments about what else is a NetScaler used for, presuming we confine the answer to XenApp/XenDesktop, some shops, like mine require it the use of the FIPS encryption offload card only available on a physical NetScaler.  Banks & government agencies make use of this physical encryption card.  Expanding on that answer, we further leverage the NetScaler to provide the same FIPS security for our XenMobile and ShareFile on-premise solutions.


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Thanks for the nice comments...I wondered how this would go down. I really am pulling for Citrix, and I don't want to sound like I'm blaming any person, product, acquisition, or strategic move in particular. I'm sure every decision made sense at the time (and were even praised by us!), but incrementalism has a habit of catching up to you.


Also, @Lee, thanks for bringing up XenMobile. I didn't talk much about it in the article, but I think it should remain as a core feature as well (as well as CWC). The Desktop Virt and EMM space overlap quite well (as we see with VMI and App Refactoring), and I think XenMobile and CWC can be something Citrix expands on.


I sense another article coming..."What is core, exactly?" I'm pretty sure we did this same exact thing for VMware a few years ago.


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Being a citrix customer for 15 years.  XA 6.5 was the best release ever.  We have tried twice to go to a 7.X release and still haven't be able to pull it off due to missing features and lack of focus by Citrix.  The axed our version of Citrix (Advanced Edition) right after we renewed maintenance, then recanted after compaints weekly.  Also concur with Stan Czerno comments on Secure Gateway.  Have used this product for 5+ years.  Moving to Netscalar was a real challenge for just needing ICA Proxy.


For us small companies, Citrix has decided we aren't that important and keep making the product more complicated, charge fees for this, and fees for that.


I am hopeful the Elliot addition gives focus on keeping things simple and making application deployment their number 1 focus.


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@Gabe


I don't understand the relationship between the two halves of your headline:


Yes, Citrix had it coming, but why should that calm down Citrix customers/partners?


Mark T, great as he has been, shouldn't have come back. Now that he's leaving (again), let's hope for Citrix's sake that they find another great CEO. Who that is will be key to Citrix's strategy and success (or lack thereof).


Whomever that is will need to contend with the fact that Windows' decline also heralds the decline of XenApp/XenDesktop. Like many, I believed that proliferation of end-point device types represents an opportunity for remote access to Windows desktops and applications. Turns out we were wrong.


Yes, remote access is a bridging technology to that future heterogeneous EUC world, but a rather short bridge. Nobody wants a legacy Windows desktop on a mobile device. Nobody wants tiled Windows anywhere. And people are leaving Windows applications in favor of true mobile apps and web apps much faster than previously expected.


I know people here, on bm.com, want Citrix to refocus on Xen, retain NetScalar, integrate a great UEM, and maybe also layering. That may be great for existing customers/partners, at least in the short-term. Will that reboot Citrix success and growth? If that's all Citrix does, I doubt it.


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Would it be more prudent to say that all customers and partners should panic, think Citrix is going out of business, and abandon ship?


No way! The thing to do right now is wait and see. It was bound to happen, and the fact that it IS happening isn't necessarily a bad thing.


So I stand by it. Everyone needs to calm down. Everyone that didn't buy $1 billion worth of Citrix, at least.


As for your point about the future of Citrix, I agree that Windows is short bridge (but that's ok because it's a slow walk). However, chasing the next thing while spinning so fast you explode outwards in all directions isn't good either. They need to refocus on what they do best, then build.


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Gabe is right. Elliott is saving the customers and shareholders from the management team. Who should be worried is the regional sales management teams. They replaced your SVP and your CEO... and your regional Americas team is still in place? You're next. This is in the best interest of the shareholders and customers. So glad this is happening.


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Change is the nature of things. We will see other, so called big companies, get swallowed up or bought out. It is the mere effect of storage, compute, hypervisor lines blurring and companies scrambling to compete with a complete offering.


What's bad for Citrix though, is that they kept acquiring irrelevant technologies while losing focus on core business release quality.  It goes like this: abandon XenServer development right after they messed it up with XS 6.0 (great idea), then tell your customers that you're serious about it after all abandon ship (XS 6.5 anyone!), then acquire podio (because its such a great added value), then octublue (that one is a head scratcher), then aquire two separate mobility products that are so-so then try to glue them together (major fail) then recode both of them to make a true one product (so called XenMobile 10, and still buggy as they come). Moreover, and what's amazing to me, is that someone allowed XenDesktop 7.0 to be released with so many missing features and bugs while ditching your bread and butter brand "XenApp" ... then come back and tell your customers "We Love XenApp", then 7.6 is still missing a ton of features then you go out and extend XA 6.5 support yet another year because your customers are telling you "your new stuff sucks!". Maybe not in that order but that is one hell of a messy couple of years, all that while watching VMware ramp up their EUC offering with products that actually add value; they're not perfect but looks like they have a track planned out and its working out for them.


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