In a blog post in InformationWeek today, Bob Evans writes “Is Cisco Looking To Acquire Citrix For Virtualization Play?” That blog post was massively posted to twitter, causing me to wake up to an inbox full of “What do you think of this?” emails. So rather than replying to all of those one-by-one, or rather than trying to get my response down to 140 characters, I thought I’d respond here.
Bob’s blog post has no new data or information. Instead he just quotes a Motley Fool article and throws in some random sentences about Citrix buying Xen. (By the way, I’m not saying Bob’s post is bad... Quite the opposite, in fact, since so maybe people are talking about it. Congrats man!) What I’m saying is that there was nothing new in it. So to dig into the validity of his post, we have to go to the Motley Fool by Anders Bylund article that was his source, “Where's the Next Big Buyout in Tech?” (posted three days ago, mind you)
From the article:
So now Oracle owns three different virtualization products: Sun's xVM suite, Virtual Iron's eponymous package, and its own Oracle VM. Curiously, all three solutions borrow the crucial hypervisor component, which helps you manage a multitude of virtual machines from a central point, from the previously open-source Xen project. Citrix Systems (Nasdaq: CTXS) owns Xen now, giving that company a bit of leverage on what happens in the broader virtualization market.
Obviously anyone who’s actually in our industry who reads this notices the glaring error: Xen is NOT a “previously open source project.” It is STILL an open source project. Therefore saying “Citrix owns Xen now” is just flat-out not true!
Of course, with VMware (NYSE: VMW) looming large over said market and Microsoft (Nasdaq: MSFT) working hard to catch up with its Hyper-V line, that could make small-cap Citrix the next acquisition target here. Cisco Systems (Nasdaq: CSCO) is not afraid of buying its way into new markets, doesn't have any virtual machine software of its own, and could essentially build an entire data center on its own platforms with Citrix under its belt. Oh, and a deal for less than $10 billion (including a generous buyout premium) would be a mere morsel for ultra-rich Cisco. Many of the same arguments would work for Hewlett-Packard (NYSE: HPQ) as well.
I love how the HP thing is thrown in at the end, like as a safety “I told you so!”
Bottom line: This is nothing new. There is no new rumor. (Well, there’s a new rumor, but it’s not based on new information.) It’s just one random blogger thinking out loud and then another blogger and then twitter. The end.
But what if Cisco did buy Citrix?
I last commented on that rumor in April 2008. My views today are the same as they were then. I would LOVE it if Cisco bought Citrix. (I just don’t think it’s any more likely to happen today than it was 13 months ago.) In fact it might even be a bit less likely, what with Cisco’s UCS stuff and apparent commitment to VMware. I also don’t think Microsoft would let Cisco buy Citrix… I think they would step in and take them defensively.
By the way, now that I live in the Bay Area, the buzz out here from just about everyone is that most people expect that if Cisco bought anyone, it would be VMware. (Not now, but eventually.) So given that, man, what would VMware do if Cisco did end up buying Citrix? (Which again, just to be clear, I don’t think is going to happen.)