Citrix to acquire XenSource in deal worth $500 million

Citrix acquires XenSourceXenSource, whose founders helped develop the open-source Xen hypervisor, will be acquired by Citrix Systems in a $500 million deal. The acquisition announcement, just yesterday, comes hot on the heel of VMware's IPO of 33 million shares. (TechRepublic Blogs: VMware comes of age in IPO)

The XenSource acquisition is not totally unexpected. Citrix has for some time now, been advocating the faster delivery of both Windows-based as well as Web-delivered desktop applications. According to Wes Wasson, the chief strategy officer with Citrix: "We want to be able to deliver any application to any users over any network."

Incidentally, the acquisition comes only days after XenSource launched the latest version of its XenEnterprise, which looks to be a direct competitor to arch-rival VMware's flagship Virtual Infrastructure suite.

Though generally applauded as a move that will strengthen the position of Citrix on some fronts, the sentiment is that success is not at all guaranteed. Frank Gillett, an analyst with Forrester Research says in an eWeek report:

The name Citrix does not really roll off the tongue when it comes to server virtualization... It's also a very big transition for XenSource. What Citrix has done strikes me as a very ambitious and difficult move.

Proponents of the deal, on the other hand, point out that the XenSource deal might pressure VMware to drop the price on some of its products. Still, others are less optimistic on the actual impact to VMware. Stuart Williams, an analyst with Technology Business Research, notes that it will be difficult for anyone, even Microsoft, to catch up with VMware at this point. The deal, expected to close by the fourth quarter of this year, will see XenSource and its employees forming a new division within Citrix called the Virtualization and Management Division. This new division will be headed by the current CEO of XenSource.

Whatever it is, the battle lines are being drawn right now as untold millions of dollars are frantically poured into R&D on the various fronts. The future of software titans worth billions are on the line.

Surely, the consumer can only stand to benefit from this competition. And who knows, as the fruits of the R&D efforts pan out, perhaps computing as we know it will never be the same again.

Is your company planning to roll-out any new VMware-based virtualization this year? Does this announcement affect your virtualization plans in any way?


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Paul Mah is a writer and blogger who lives in Singapore, where he has worked for a number of years in various capacities within the IT industry. Paul enjoys tinkering with tech gadgets, smartphones, and networking devices.

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