Citrix and XenSource: The best offense is good defense

Citrix Systems was already a wild card in the virtualization game. The longtime leader in thin client computing, clearly awakened from a slumber by VMware's launch of the Virtual Desktop Initiative last year, has been sprinting ever since to stay ahead of the threat. The acquisition of XenSource fills the remaining hole in Citrix' virtualization portfolio, allowing Citrix to go shoulder to shoulder with VMware (and soon Microsoft) on the desktop virtualization front. It also plops Citrix into the lucrative server consolidation market.

For companies thinking of pulling end-user workspaces onto server farms -- both to break the cycle of expensive client-side hardware upgrades (a move encouraged by Vista) and to keep enterprise data safely tucked away in the datacenter -- desktop virtualization has a key advantage over thin client computing: Instead of serving a standard desktop configuration to every user, it gives each user the same sort of personalized workspace we've all become accustomed to.

When it became clear that VMware wasn't satisfied with owning the virtual server space but wanted desktops too, Citrix was quick to respond to the threat and also quick to see how both desktop virtualization and application virtualization could complement its flagship Presentation Server. By February of this year, it had rolled a SoftGrid-like application streaming solution into Presentation Server, and in April it unveiled Desktop Server, a connection broker and remote access manager to desktops hosted on any flavor of server, be it Presentation Server, hypervisor-based virtual servers, or a server blade system.

The acquisition of XenSource continues the series of defensive moves against VMware, which Citrix must keep from eating away at its hosted desktop business. It also allows Citrix to hit back at VMware on the server virtualization front. Here, Citrix's resources could give XenSource a much-needed boost in beefing up its virtual machine management tools, where XenSource trails not only VMware but also Virtual Iron and undoubtedly Microsoft, whose server virtualization solution finally seems to be closing in on a ship date.

With VMware's hugely successful IPO and Citrix's XenSource gambit, this has been a fun week for virtualization watchers. But the weeks and months ahead will be even more fun as the one-horse race turns into a real fight. Microsoft is entering the ring. With XenSource snatched up, Virtual Iron expects to draw more interest in partnerships from industry heavyweights. And Citrix, whose claims to virtualization leadership carried the smell of desperation just a year ago, now holds a virtualization technology portfolio that perhaps only Microsoft can beat.

The Citrix play for XenSource might simply amount to good defense, but it puts the company in excellent field position. Whatever happens next, it looks like VMware might have launched that IPO just in the nick of time.