News that Citrix has acquired XenSource for $500m hit the wire today as the tail end of a flurry of activity over the past week or so in the virtualization space. Rumor and speculation had the application and desktop delivery company in talks with the privately owned XenSource about the terms of an acquisition on the heel of yesterday's successful VMWare IPO. Personally, the only surprising aspect of the announcement was the short period of time after the whispering about the deal started and the trigger was pulled on it. As is to be expected, the deal entails important implications and features several interesting angles.
What the Citrix acquisition means, depends on who you are and the ways in which you're involved with and affected by [open source] virtualization, in general -
XenSource: Despite its involvement with the Linux community through the open source Xen project community, 90% of the company's customers are Windows-only, meaning they were a Windows-centric company before Citrix entered the picture. Obviously, being able to cash-in to the tune of $500m with company revenue figures estimated at a "few million dollars," by Citrix CFO David Henshall, is a positive. Yet the company has traded its position as an emerging, independent player in a hot market for virtualization solutions for a run through the M&A marketplace. Obviously, Citrix's vision becomes de-facto and inevitably includes a high degree of compatibility with long-time partner Microsoft and its virtualization technologies. One has to wonder where Linux fits in for the newly acquired XenSource?
The Linux community: Work by the Linux community in getting Xen included with distributions and ultimately the kernel itself is set to affect the future of Xen as an open source project. Xen has already been fostered into both Red Hat Enterprise Linux and Novell SUSE Linux Enterprise server, plus others. Additionally, the Linux kernel has tentatively stated that Xen will be included with kernel version 2.6.23 due in October. Yet with the server-focused Novell and Red Hat enterprise Linux distributions already featuring the Xen hypervisor and despite XenSource having made its commercially licensed technologies available for Linux, customer uptake remained mainly on the Windows end of the spectrum. Numbers which strongly hint at Xen being used as a cost-effective alternative to VMWare's ESX platform.
A reality that does little to eliminate incentive on behalf of the Linux community to remain involved with the future of the Xen open source project. Therefore, as Citrix explores the possibility of relinquishing some control over the Xen project, look for all three to demonstrate their vested interest in the decision. While XenSource may be expressing a desire to meet the realities of its customer base in such a way as to imply turning its back on Linux, Xen technology for Linux is still very much promising enough to warrant an open source future that includes the entire Linux community. Most likely, the acquisition will spur the creation of more infrastructure around the Xen hypervisor as XenSource's commitment to Linux is no longer crystal clear.
Microsoft: Currently, Microsoft is facing the prospect of playing follow-the-leader, with its flagship virtualization technology not due, at the earliest, until next year. Even the company's Windows Server Virtualization (WSV), an add-on to Windows Server 2008, isn't slated for release until mid-2008. In this case, Citrix will serve as a product development go-between for its newly acquired XenSource technology and Microsoft. At the point where the Redmond-based company has finished WSV, it won't have to compete head-on with Xen and VMWare. Instead Microsoft will have the option of leveraging Xen adoption through the interoperability built into WSV.
Citrix: As it stands right now, before proceeding with its long-term strategy as it relates to XenSource technology, Citrix should be looking to seamlessly transition some of their involvement with the open source Xen project into another set of capable hands. I say this because Citrix strategy is Windows-centered to the point that its impartiality in an open source setting will most certainly be compromised. Plus, the strength of the Xen engine lies in collaborative development driven by a diverse open source community, featuring contributions from including Intel, AMD, IBM, among others.
None of those companies exercise an inordinate amount of control over Xen and for good reason. Perhaps, Citrix should take a hint from IBM and how it turned over governance of Eclipse to a not-for-profit foundation. As capable as IBM might have been and still is, from a resource perspective, Eclipse isn't the platform it is today without them having given up top-down control.
As more facts come to the light regarding the acquisition, more can be said about the future and direction of those involved/affected. However, at this current point in time, it suffices to say that this definitely shakes up an already interesting market segment, making virtualization an area to watch even all the more closely.