Note: I spoke with Citrix senior vice president of global Microsoft relations Nabeel Youakim and senior vice president of corporate development Dave Jones the day this deal was announced. I've added additional information to the end of this article based on that conversation.
Citrix and Microsoft announced today that they're renewing their cross-licensing agreement for another five years.
The press release was light on details, although it appears that this is nothing more than an extension of their current agreement. The current agreement, previously renewed every three years, is what allowed Microsoft to get the core Terminal Server code from Citrix and Citrix to get the Windows source code from Microsoft.
The press release mentioned the word "Longhorn" five times, although it didn't say what Citrix was going to be doing with Longhorn or in the Longhorn timeframe.
Most likely, the main point of this press release is for Citrix to convince people it's okay to buy MetaFrame and that MetaFrame will still have value in the Longhorn timeframe.
Mark Templeton's quote was filled with the requisite terms ("exciting," "integration," "help us deliver solutions," "help us better serve our customers, "great value to customers," and "agreement is a driver of innovation.").
Microsoft's response from Bob Muglia (SVP for Windows Servers) was equally as insightful. "We are excited to expand our business relationship with Citrix Systems in order to better serve our customers. This collaboration will result in an improved and more extensible Windows Server platform for ISVs that broadens the solutions for Windows server and ensures that Windows 'Longhorn' Server will be the best platform for access solutions available in the market. Furthermore, this technology and patent licensing agreement provides an important context for our collaboration with Citrix."
It's like buzzword bingo.
Don't get me wrong, I think this deal is good for Citrix because it means that they won't have to renegotiate with Microsoft again until 2009. It's just that I don't think there's anything groundbreaking in this specific announcement, and I don't really see it changing anyone's view of either company.
- This deal is more expansive and increase the collaboration between the two companies. Citrix employees will now work on the Microsoft campus to help shape the future of the Terminal Services platform.
- There is patent language in the agreement that will allow both companies to operate without getting sued. While this won't mean that the two companies will exchange trade secrets, it will allow them to "borrow" ideas and concepts from each other in this area.
- For the first time (that I'm aware of), Citrix officially went on record saying that they are "not doing a Linux version of MetaFrame. We are very clear." This was according to Dave Jones, who previously only said that they will do what customers demand.
- Citrix will start to work with groups in Microsoft other than just the Terminal Services group. We began to see this last October at iForum when with the Office group. Citrix wouldn't list specific groups moving forward, but we can bet they'll be closely watching / working with Microsoft's Network Access Protection (like Citrix's SmartAccess) and Anywhere Access Gateway (like Citrix's Web Interface and MSAM) groups.
The Bottom Line
So what does this deal really mean for the two companies? Here's my one-line summary for each.
For Citrix, it means that they can witness the development process of Terminal Services for Avalon & Longhorn, so they can build a version of MetaFrame that adds value here regardless of whether any Bear Paw features are included or not.
For Microsoft, it means they can "borrow" cool server-based computing ideas from Citrix to build into Longhorn, and it means that Citrix will heavily push Microsoft Terminal Services over the next five years which could be worth $2B in incremental revenue to them.