The old rumor of Citrix getting acquired popped up again over the past few weeks when Briefing.com reported that Oracle might be interested in buying Citrix. Barron’s Tiernan Ray mentioned it on December 23, and The Register’s Timothy Prickett Morgan ran a full analysis a week later. The rumor didn’t really catch on though until yesterday when a few more folks found it and blogged about it. That led to lots of twitter conversations and kind of put the whole thing front-and-center for a lot of people. (Even Citrix’s Desktop CTO Harry Labana joined in with a “don’t ask me, I don’t know anything!” tweet.)
What’s interesting about these rumors is how they truly take on a life of their own with very little original validity. In this case it was just one mention on Briefing.com—everything else was from bloggers referencing other bloggers who referenced other bloggers...
So I guess rather than join the noise, I’ll try to look at why this rumor might or might not be true.
Why this rumor might be true
Let’s start by exploring why this rumor might be true. In this case we’ll look at aspects of Citrix and Oracle that could work well together as opposed to trying to validate the source of the rumor itself. (So this is more of a lazy blogger armchair commenter thing as opposed to an actual journalist tracking down sources.)
Oracle needs some kind of desktop presence
Tarry Singh writes that Oracle buying Citrix “would give Oracle stake in the desktop market dramatically. Oracle wants to be the IBM and this would beat IBM to its game and not to mention that VMware and other players will be stunned as Oracle’s huge and angry sales machine will go after the customers and the desktop market like never before.”
Oracle wants to continue to compete with VMware and IBM
If VMware and IBM go down the desktop path, then so to will Oracle.
Oracle wants to own Xen (to the extent that a vendor can “own” it).
From Morgan’s analysis in The Register, “Oracle has its own implementation of the open source Xen hypervisor, which was based largely on the work done by Red Hat as it commercialized Xen in Red Hat Enterprise Linux 5. When it became clear that Red Hat was going to shift to the KVM hypervisor when it bought Qumranet for $107m in September 2008, Oracle looked around for another set of Xen tools and snapped up Virtual Iron, which had its own variation on the Xen theme.”
He goes on to write that Oracle likes to be in control, and since Citrix bought XenSource which controls Xen, this would mean that Oracle could control Xen (just like they’’ control Java with Sun).
Oracle can do the open source thing
Colin Steele suggested that Xen’s open sourciness could be a problem for Oracle since they’re a proprietary software company. But Sun is pretty hard core open source, so if Oracle can handle Sun’s open sourciness, then they can certainly handle Citrix’s.
If VMware gets bought, someone will have to buy Citrix
There’s still a quasi-persistent rumor that Cisco will by EMC/VMware. If this is true then someone will have to buy Citrix, and Oracle’s as good as anyone. (Who else? HP? IBM? Microsoft?)
Why this rumor might be false
Of course the ability to conjure up a reverse-engineered list of half-assed reasons that these two companies could compliment each other doesn’t prove any rumor. But the contrary is not the case. There are two huge reasons that Oracle buying Citrix seems unlikely.
Microsoft wouldn’t let it happen
We’ve written about this in the past for every “X rumored to buy Citrix” article we’ve written. Microsoft needs Citrix in their camp. That was true with Citrix’s add-on products for Terminal Server, and it’s even more true now that Hyper-V really needs the Citrix Essentials add-on.
Surely Citrix’s legal agreements with Microsoft mean that Citrix couldn’t be bought without Microsoft’s knowledge. And once they caught wind of that, they’d throw together a competitive counter-offer. Some have suggested that Microsoft’s anti-trust issues would prevent them from being able to pull this off. While that was certainly the case in the past, it seems that there’s no danger of a Microsoft monopoly in this space, so them acquiring Citrix would possibly be ok.
Citrix is too expensive
Morgan’s Register piece shows that with a market cap of $7.8b, it would take $9 or $10b to buy the company. But with only $1.6b in sales for $178m in profits, Citrix’s sales price should be more like $3b. Morgan also points out that Oracle is only planning to spent $7.4b to buy Sun, and that’s going to give them $10 to $12b in additional revenue. So would they really spend $10b to buy under $2b in revenue?
What if Oracle did buy Citrix?
Finally, let’s just pretend that this acquisition does go through. What does that mean for the industry?
First, since Oracle and Microsoft are not really friends, it might mean that a lot of the closeness that Citrix and Microsoft enjoy could disappear. This would in-tern lead to stronger desktop virtualization products from Microsoft since they wouldn’t be able to rely on Citrix for critical features. (I don’t know if the same thing would happen in the server virtualization space though. I think when it comes to Hyper-V, Microsoft really is doing everything they can to get it up to spec as fast as possible. Contrast that to Microsoft’s VDI and Remote Desktop efforts, which have been back-burnered for the past decade.)
Would that lead to better products from Citrix? Who knows. Probably not. Would it lead to better products all-around? Probably.
But I’m not much of a futurist. Pretty much every prediction I’ve ever made has been comically wrong. (Unless Microsoft did combine IIS and TS back in 2005 and I just missed it.) What do you think?