Welcome!

Java IoT Authors: Jnan Dash, Roger Strukhoff, Elizabeth White, Pat Romanski, Liz McMillan

Related Topics: Containers Expo Blog

Containers Expo Blog: Article

Virtualization Player Citrix Buys VMware's Open Source Rival for $500M

Citrix Buys VMware's Open Source Rival for $500m

The day after the great VMware IPO Tuesday, supposedly the hottest thing since Google went public, Citrix, a Microsoft camp follower with the scars to prove it, said it's acquiring VMware's open source commercial competitor, XenSource Inc, the company that developed Xen's chi-chi hypervisor.

It's paying about $500 million in cash and stock (60-40), a pricey number not all that different from the $635 million that EMC paid for VMware early in '04. But considering it's for an open source start-up not yet three-years-old with 80 people and under $5 million in annual revenues, it's rich.

The price includes the assumption of about $107 million in unvested stock options to hold people and the deal will result in an $8 million-$10 million write-off for in-process R&D.

Obviously Citrix expects the merger to move it and its thin client-style software, which reflects applications running on the server onto the desktop - a specialty under pressure by virtualization - into the adjacent server and desktop virtualization game, calculated to grow to nearly $5 billion over the next four years, and put maybe 30 million office workers on virtual desktops in the next five years.

That being the case, Citrix expects XenSource to advance its own application delivery business by adding key enablers that push to virtualize the logic and data tiers of applications. It's promising to make the solutions cheaper and less complicated.

Citrix figures the acquisition strengthens its partnership with Microsoft. See, XenSource, which works on Windows, has access to Microsoft's hypervisor virtualization widgetry, code named Viridian and due out in 3Q08.

And Citrix did manage to wheedle a ra-ra quote from Microsoft senior VP, servers & tools Bob Muglia for its announcement. Maybe that means Microsoft will use some of Xen in Viridian or, according to The 451 Group's musings, maybe just up and buy Citrix.

The 451 folks figure Viridian becomes the "base operating system for its next business," as it borrowed from Microsoft to start its original business, and "save a couple of years development time by buying XenSource to get into the virtualization market."

The acquisition of XenSource and its 650 customers, a number that reportedly doubled in the last 90 days, is supposed to close in Q4. Citrix then intends to create a Virtualization & Management Division to house it led by XenSource CEO Peter Levine. He will report to Citrix president and CEO Mark Templeton.

In a canned quote, Levine said, "This move is not about competing for the 5% of the market that is already being served. It's about steering into the 90% white space that is wide open, both at the server and in the new emerging opportunities at the desktop."

The shiny new rev of XenSource's version of Xen, XenEnterprise 4, due to ship on August 20, adds mobility, monitoring and storage integration and 64-bit support good for SQL and Exchange 2007. It can now handle physical systems with 128GB of memory and offer guest operating systems 32GB of space, accommodating a physical CPU limit of an eight-way server, better than what VMware can manage.

When the new cut was announced Monday, XenSource was already thinking about melding it with Citrix' Desktop Server and about helping Citrix Desktop Server deliver desktops from the data center as a secure on-demand service.

Citrix intends to push XenSource through its 5,000 channel partners and leverage its relationships with server and data center infrastructure folks, like Symantec with its Veritas storage interests, to create additional routes to market through OEM sales channels.

Citrix says it will continue to contribute to the Xen open source project that's led by XenSource co-founder Ian Pratt but between now and when the deal closes, they're going to try to develop procedures for independent oversight of the project. Both Novell and Red Hat include Xen.

Citrix said the acquisition will add $1 million in revenue and roughly $3 million in cost revenue and operating expenses to its 2007 fiscal year and $50 million in revenue and $60 million-$70 million in total cost of revenues and operating expense to its 2008 fiscal year.

XenSource was backed to the tune of $41.5 million by Sevin Rosen, Ignition Partners, New Enterprise Associates, Accel Partners and Kleiner Perkins, a prestige lot.

VMware has been awarded 85% of the market and then there's Virtual Iron.

More Stories By Virtualization News

SYS-CON's Virtualization News Desk trawls the news sources of the world for the latest details of virtualization technologies, products, and market trends, and provides breaking news updates from the Virtualization Conference & Expo.

Comments (1)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
This month @nodexl announced that ServerlessSUMMIT & DevOpsSUMMIT own the world's top three most influential Kubernetes domains which are more influential than LinkedIn, Twitter, YouTube, Medium, Infoworld and Microsoft combined. NodeXL is a template for Microsoft® Excel® (2007, 2010, 2013 and 2016) on Windows (XP, Vista, 7, 8, 10) that lets you enter a network edge list into a workbook, click a button, see a network graph, and get a detailed summary report, all in the familiar environment of...
IT professionals are also embracing the reality of Serverless architectures, which are critical to developing and operating real-time applications and services. Serverless is particularly important as enterprises of all sizes develop and deploy Internet of Things (IoT) initiatives. Serverless and Kubernetes are great examples of continuous, rapid pace of change in enterprise IT. They also raise a number of critical issues and questions about employee training, development processes, and opera...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
AI and machine learning disruption for Enterprises started happening in the areas such as IT operations management (ITOPs) and Cloud management and SaaS apps. In 2019 CIOs will see disruptive solutions for Cloud & Devops, AI/ML driven IT Ops and Cloud Ops. Customers want AI-driven multi-cloud operations for monitoring, detection, prevention of disruptions. Disruptions cause revenue loss, unhappy users, impacts brand reputation etc.
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
Atmosera delivers modern cloud services that maximize the advantages of cloud-based infrastructures. Offering private, hybrid, and public cloud solutions, Atmosera works closely with customers to engineer, deploy, and operate cloud architectures with advanced services that deliver strategic business outcomes. Atmosera's expertise simplifies the process of cloud transformation and our 20+ years of experience managing complex IT environments provides our customers with the confidence and trust tha...
The Japan External Trade Organization (JETRO) is a non-profit organization that provides business support services to companies expanding to Japan. With the support of JETRO's dedicated staff, clients can incorporate their business; receive visa, immigration, and HR support; find dedicated office space; identify local government subsidies; get tailored market studies; and more.
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
As you know, enterprise IT conversation over the past year have often centered upon the open-source Kubernetes container orchestration system. In fact, Kubernetes has emerged as the key technology -- and even primary platform -- of cloud migrations for a wide variety of organizations. Kubernetes is critical to forward-looking enterprises that continue to push their IT infrastructures toward maximum functionality, scalability, and flexibility. As they do so, IT professionals are also embr...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...