Partners will fight server battles
Though sales of virtual desktops still lag far behind the expectations most analysts and vendors had for 2010, Citrix' lead in virtual desktops has persisted because VMware lagged in both technology and marketing in the past, though it is coming up to speed now, Wolf says.
VMware concentrates so much of its sales and marketing on long-term strategic pitches it misses many of the relatively quick sales Citrix snaps up by also approaching mid-level corporate IT people "trying to solve specific pain points and finding tactical ways virtual desktops can address that," Song says.
Citrix hasn't quite given up its efforts to use its XenServer as a direct competitor to VMware's ESX and vSphere, but it is focusing far more on the desktop, leaving direct competition in the server market to its partners, according to Sumit Dhawan, vice president of product marketing for Citrix XenDesktop.
"The server market is dominated by VMware, with Microsoft being the second franchise trying to break that leadership," Dhawan says. "Anything we do in the server space will be in disrupting that competition to take some share back from VMware."
Though Dhawan says revenue for XenDesktop is split about evenly between upgraders and new installations, Citrix' second-quarter earnings announcement showed 1,000 new customers for XenDesktop compared to 2,500 upgrading to it from XenApp or other products. The report also showed Citrix had doubled the percentage of customers upgrading to XenDesktop as their XenApp licenses expired, however, from 10 percent in Q1 2010 to 20 percent in Q2.
VMware doesn't break out VMware View sales figures. Nielsen and CEO Paul Maritz told analysts during a July 21 earnings call that the company wasn't sure when VDI sales would hit the tipping point at which revenue would become critical to VMware.
"Our eyes are certainly on the ball and we are going to make sure that when it does tip, we are there to take advantage of it," Nielsen said. A May 20 report from Goldman Sachs predicts revenue from virtual desktop products will rise to $1.5 billion by 2014, that 13 percent of corporate PCs may be virtualized and that Citrix will hold 48 percent of the market compared to 36 percent for VMware.
Citrix will continue to support Microsoft's efforts to unseat VMware as the leader in server virtualization products, and will snap up any sales it finds there, if only to "disrupt the efforts of our competitors," Dhawan says.
Its strategic focus will be on virtual desktops, however, primarily because it believes VDI will transform corporate IT so completely as to make virtual desktops the most critical part of the data-center infrastructure, Dhawan says.
"We believe desktop virtualization is the next big wave of growth, so our strategy is to serve customers there first," Dhawan says.