Citrix unveiled the acquisition of Cloud.com at 6 am PT on July 12th, an ultra-hot Silicon Valley startup that powers many of the world’s largest and most successful clouds.  This announcement was just made 3 hours before VMware held a major launch event to unveil the next phase of their cloud computing strategy.  The timing of these announcements highlights the tight and exciting race between these two companies to lead a market projected to exceed $11 billion by the end of 2014.

VMware presented its new cloud structure suite, including products such as vSphere 5, vShield 5, vCenter Site Recovery Manager 5 and vCloud Director 1.5.  The goal is to increase the value that customers can extract from virtualized resources by enabling cloud-scale operations.  As Paul Maritz, VMware CEO explains: "With vSphere® 5 and our cloud infrastructure suite, VMware is helping customers accelerate towards more efficient and automated cloud infrastructure, redefining how resources are managed and secured, and ultimately, driving a more productive relationship between IT and the businesses they serve."

In the case of Citrix, Cloud.com product line is not a traditional enterprise server virtualization platform with the cloud management layered on top. Instead, it is a hypervisor-agnostic solution designed from the ground up to help providers build simple, automated, elastic, scalable and efficient clouds. According to a Cloud.com customer benchmark study dated October 2010, this approach has helped customers around the world roll out new cloud services up to 50 times faster, at one fifth the cost of alternative solutions. A key question around this acquisition is how Citrix will manage OpenStack and CloudStack.  Although these two products could be viewed in direct competition, Citrix underscores that they are both highly synergistic by design.  They share the same core principles, architectures and beliefs about how ‘real clouds’ should be built and bringing them together in this acquisition is a key part of its strategy.

As a founding member of Openstack.org, Citrix is the second largest contributor to the project and is a member of the OpenStack policy board.  This acquisition will help Citrix further accelerate its support of OpenStack by allowing it to combine the two engineering teams to work together going forward.  Specifically, we can expect:

·      Release a Citrix tested and verified version of OpenStack, along with a cloud-optimized version of Citrix XenServer (announced at 2011 Citrix Synergy conference as ‘Project Olympus’).

·      Add support for OpenStack APIs into an upcoming release of Citrix CloudStack, allowing organizations to leverage existing OpenStack tools to manage infrastructures deployed via Citrix CloudStack.

·      Deliver a common, intuitive management interface that provides manageability of both the Citrix CloudStack and OpenStack platforms.

·      Add support for bi-directional migration paths between the Citrix CloudStack and OpenStack platforms.

As you would expect, during the acquisition announcement, Citrix explained that CloudStack will continue to support vSphere, Xen and KVM, as it does today.  The interesting twist is that it will now be as a project placed inside a new cloud-computing unit within Citrix.  

June was a great month for Citrix.

Firstly, it celebrated the success of its 2011 Global Conference – Citrix Synergy, which had taken place in San Francisco on May 25th-27th with over 5,500 attendees.

Secondly, Citrix XenServer received absolute top marks in the three market reports released the week starting June 6th by Gartner, Info-Tech Research and IDC.  For the first time, all three reports portrayed Citrix as a visionary leader in this space, en par with VMWare – until recently, the indisputable leader – and ahead of Microsoft – another serious contender. 

These accolades are, first, testament to the world-class server virtualization product that the XenServer product team has built (with XenServer 6 Beta going live that same week) and, second and probably more importantly, acknowledgment to the power and potential of Citrix’s vision in the cloud computing space. 

It couldn’t be any other way considering that more than 85% of the public cloud today is powered by Xen.  This includes the most successful players, from infrastructure providers like Amazon and Rackspace, to consumer players like Zynga and Google.  Citrix partnership with these companies is extremely strong.  A testament to this close relationship between Citrix and its clients is Allan Leinwand, CTO of Zynga, day 2 keynote speech at Citrix Synergy 2011.  Leinwand spoke about the key role that XenServer had played in building zcloud, Zynga’s own public cloud that revolutionized infrastructure for social gaming, clearing making Citrix’s technology a core element of its success.

John Sloan, Lead Research Analyst at Info-Tech Research Group said it best:  “Citrix provides the most comprehensive all-around solution for the price.  VMware, for many years, was the only server virtualization game in town, which allowed it to develop a healthy lead in features and functionality.  However, over the last two years, Citrix and Microsoft have largely closed this gap in consolidation and management capabilities and are now moving development to the utility infrastructure. Look closely at Citrix as an alternative to VMware - it offers many of the same features as VMware with more flexibility and a lower price.”

Interestingly enough, according to Gartner’s report, Citrix main advantage – it is the ‘open’ alternative to Microsoft and VMware – can also be a source of weakness given its long-term partnership with Microsoft.  As a result, Citrix’s go-to-market strategy regarding how it competes with / complements Microsoft remains confusing for many customers and channel partners.  The road ahead is full of promise and challenges!