Ten things I learned about Citrix..and a little history lesson

I attended Citrix’s industry analyst event a couple of weeks ago. I meant to write about Citrix right after the event but you know how things go. I got busy.  But I am glad that I took a little time because it has allowed me the luxury of thinking about Citrix as a company and where they have been and where they are headed.

A little history, perhaps? To understand where Citrix is headed, a little history helps. The company was founded in 1989 by a former IBMer who was frustrated that his ideas weren’t used at Big Blue.  The new company thought that it could leverage the future power of OS/2 (anyone remember that partnership between IBM and Microsoft?).  Citrix actually licensed OS/2 code from Microsoft and intended to provide support for hosting OS/2 on platforms like Unix.  When OS/2 failed to gain market traction, Citrix continued its partnership with Microsoft provide terminal services for both DOS and Windows.  When Citrix got into financial trouble in the mid-1990s, Microsoft invested $1 million in the company.  With this partnership firmly in place, Citrix was able to OEM its terminal servicer product to Microsoft which helped give the company financial stability.
The buying spree. What is interesting about Citrix is how it leveraged this position to begin buying companies that both supported its flagship business and move well beyond it.  For example, in 2003 it acquired Expertcity which had two products: GoToMyPC and GoToMeeting.  Both products mirrored the presentation server focus of the company and enhanced the Microsoft relationship. In a way, you could say that Citrix was ahead of the curve in buying this company when it did.
While the market saw Citrix as a stodgy presentation focused company things started to change in 2005. Citrix started to make some interesting acquisitions including NetScaler, an appliance intended to accelerate application performance,  and Teros, a web application firewall. There were a slew of acquisitions in 2006.  The first of the year was Reflectant, a little company in Lowell, Massachusetts that collected performance data on PCs.  The company had a lot of other technology assets in the performance management area that it was anxious to put to use.  Later in the year the company bought Orbital Data, a company that could optimize the delivery of applications to branch office users over wide area networks (WANs).  Citrix also picked up Ardence, which provided operating system and application streaming technology for Windows and Linux.
Digging into Virtualization. Clearly, Citrix was moving deeper into the virtualization space with these acquisitions and was starting to make the transition from the perception that it was just about presentation services. But the big bombshell came last year when the company purchased XenSource for $500M in cash and stock.   This acquisition moved Citrix right into the heart of the server, desktop and storage virtualization world.  Combine this acquisition with the strong Microsoft partnership and suddenly Citrix has become a power in the data center and virtualization market.

The ten things I learned about Citrix. You have been very patient, so now I’ll tell you what the things I thought were most significant about Citrix’s analyst meeting.

Number One:  It’s about the marketing.  Citrix is pulling together the pieces and presenting them as a platform to the market. My only wish is that some company would not use the “Center” naming convention for their product line.  But they have called this Delivery Center. The primary message is that Citrix will make distributed technology easier to deliver. The focus will be on provisioning, publish/subscribe, virtualization, and optimization over the network.

Number Two: Merging enterprise and consumer computing. Citrix’s strategy is to be the company that closes the gap between enterprise computing and consumer computing.  CEO, Mark Templeton firmly believes that the company’s participation in both markets makes it uniquely positioned to straddle these worlds.  I think that he is on to something.  How can you really separate the personal computing function from applications and distributed workloads in the enterprise?

Number Three.  Partnerships are a huge part of the strategy. Citrix has done an excellent job on the partnering front.  It has over 6,000 channel partners.  It has strong OEM agreements with HP and Dell and Microsoft.  Microsoft has made it clear that it intends to leverage the Citrix partnership to take on VMWare in the market.

Number Four: Going for more. The company has a clear vision around selecting adjacent markets to deliver an end-to-end solutions.  Clearly, there will be more acquisitions coming but at the same time, it will continue to leverage partnerships.

Number Five: It’s all about SaaS. Citrix has gained a lot of experience in the software as a service model over the past few years with its online division (GoToMyPC and GoToMeeting).  The company will invest a lot more in the SaaS model.

Number Six. And its all about the Cloud. Just like everyone else Citrix will move into Cloud Computing.  Because its NetScaler appliance is so prevalent in many SaaS environments, it believes that it has the opportunity to become a market leader. It is counting on its virtualization software, its workflow and orchestration technology to help them become a player.

Number Seven:  Going for the gold. With the acquisition of XenSource combined with its other assets, Citrix can take on VMWare for supremacy in virtualization.  This is clearly an ambitious goal given VMWare’s status in the market.

Number Eight.  Going after the Data Center market. Citrix believes that it has the opportunity to be a key data center player. It is proposing that it can lead its data center strategy by starting with centralization through virtualization of servers, desktops, and operating systems and provide dynamic provisioning, workflow, and workload management.  Citrix has an opportunity but it is a complicated and crowded market.

Number Nine: Desktop graphic virtualization.   Project Apollo, Citrix’s desktop graphics virtualization project seems to be moving full steam ahead and could add substantial revenue to the bottom line over time.  However, there is a lot of emerging competition in this space so Citrix will have to move fast.

Number Ten: Size matters. And speaking of revenue — Citrix is ambitious. While its revenues have topped $1 billion, it hopes to triple that number over the next few years. And then, what? Who knows.

Can HP Lead in Virtualization Management?

HP has been a player in the virtualization market for quite a while.  It has offered many hardware products including its server blades have given it a respectable position in the market. In addition, HP has done a great job being an important partner to key virtualization software players including VMWare, Red Hat, and Citrix. It is also establishing itself as a key Microsoft partner as it moves boldly into virtualization with HyperV.  Thus far, HP’s virtualization strategy did not focus on software. That has started to change.  Now, if this had been the good old days, I think we would have seen a strategy that focused on cooler hardware and data center optimization. Now, don’t get me wrong — HP is very much focused on the hardware and the data center. But now there is a new element that I think will be important to watch.

HP is finally leveraging its software assets in the form of virtualization management.  If I were cynical I would say, it’s about time.  But to be fair, HP has added a lot of new assets to its software portfolio in the last couple of years that make a virtualization management strategy more possible and more believable.

It is interesting that when a company has key assets to offer customers, it often strengthens the message. I was struck by what I thought was a clear message that a found on one of their slides from their marketing pitch, “Your applications and business services don’t care where resources are, how they’re connected or how they’re managed, and neither should you. ”  This statement struck me as precisely the right message in this crazy overhyped virtualization market.  Could it be that HP is becoming a marketing company?

As virtualization goes mainstream, I predict that management of this environment will become the most important issue for customers. In fact, this is the message I have gotten load and clear from cusotmers trying to virtualize their applications on servers.  Couple this will the reality that no company virtualizes everything and even if they did they still have a physical environment to manage.  Therefore, HP focuses its strategy on a plan to manage the composite of physical and virtual.  Of course, HP is not alone here. I was at Citrix’s industry analyst meeting last week and they are adopting this same strategy. I promise that my next blog will be about Citrix.

HP is calling its virtualization strategy its Business Management Suite.  While this is a bit generic, HP is trying to leverage the hot business service management platform and wrap virtualization with it.  Within this wrapper, HP is including four componements:

• Business Service Management — the technique for linking services across the physical and virtual worlds. This is intended to monitor the end-to-end health of the overall environment.
• Business Service Automation — a technique for provisioning assets for distributed computing
• IT Service Management — a technique for discovering what software is present and what licenses need to be managed
• Quality Management — a technique for testing, scheduling, and provisioning resources across platforms. Many companies are starting to use virtualization as a way of testing complex composite applications before putting them into production. Companies are testing for both application quality and performance under different loads.

I am encouraged that HP seems to understand the nuances of this market.  HP’s strategy is to position itself as the “Switzerland” of the virtualization management space.  It is therefore creating a platform that includes infrastucture to manage across IBM, Microsoft, VMWare, Citrix, and Red Hat.  Therefore, it is positioning its management assets from its heritage software (OpenView) and its acquisitions to execute this strategy. For example, its IT Service Management offering is intended to manage the compliance with license terms and conditions as well as charge backs across hetergenous environments. It’s Asset manager is intended to track virtualized assets through its discovery and dependency mapping tools.  HP’s Operations Manager has extended its performance agents so that it can monitor capabilities from virtual machines to hypervisors.  The company’s SiteScope provides agentless monitoring of hypervisors for VMWare.  The HP Network Node manager has extended support for monitoring virtual networks.

HP’s goal to to focus on the overall health of these distributed, virtualized services from an availability, performance, capacity planning, end user experience, and service level management perspective.  It is indeed an ambitious plan that will take some time to develop but it is the right direction. I am particularly impressed with the partner program that HP is evolving around its CMDB (Configuration Management Database).  It is partnering with VMWare to embark on a joint development initiative to provide a federated CMDB that can collect information from a variety of hosts and guest hosts in an on demand approach. Other companies such as Red Hat and Citrix have joined the CMDB program.

This is an interesting time in the virtualization movement.  As virtualization matures, companies are starting to realize that simply virtualizing an application on a server does not by itself save the time and money they anticipated.  The world is a lot more complicated than that.  Management wants to understand how the entire environment is part of delivering value.  For example, an organization might put all of its call center personnel on a virtualized platform which works fine until an additional 20 users with heavy demands on the server suddenly causes performance to falter.  In other situations, everything works fine until there is a software error somewhere in the distributed environment.  The virtualized environment suddenly fails and it is very difficult for IT operations to diagnose the problem. This is when management stops getting excited about how wonderful it is that they can virtualize hundreds of users onto a single server and starts worrying about the quality of service and the reputation of the organization overall.

The bottom line is that HP seems to be pulling the right pieces together for its virtualization management strategy. It is indeed still early. Virtualization itself is only the tip of the distributed computing marketplace.  HP will have to continue to innovate on its own while investing in its partner ecosystem. Today partners are eager to work with HP because it is a good partner and non-threatening.  But HP won’t be alone in the management of virtualization.  I expect that other companies like IBM and Microsoft will be very aggressive in this market.  HP has a little breathing room right now that it should take advantage of before things change again. And they always change again.

The Desktop as a Service: Can Desktone be a Focal Point?

I have been thinking a lot about the evolution of virtualization lately and so I was intrigued when a company I had never heard of called Desktone asked to come in for a briefing. When I heard that the company specialized on desktop virtualization I was intrigued. I was even more interested when I learned that the founder came from Softricity, the OS virtualization company bought by Microsoft.

What I liked about Desktone is its focus on desktops as a service. The company has been around since 2006 and has its developers in Shaghai. The company has taken a $17 million investment round. I liked David Marshall’s overview of the technology.

What is important about what Desktone has to say is that the desktop environment can become a service offering. While I don’t expect the masses of Microsoft Windows desktops to all move en masse to desktop as a service, it is an approach that is a leading indicator of where the desktop is headed. Think back to when Windows became the platform for desktop computing. In those days, customers wanted a easy to use and pragmatic way to write letters, create a spreadsheet, follow up on email, and surf the web.

What has changed over the past five years is the growing complexity of the desktop environment. Simply put, the desktop moved from its role as a terminal for corporate applications and a tool for productivity applications into a true computing platform. The implications are complex and startling. Customers who thought of their desktop as personal where suddenly forced to deal with everything from viruses, security of stored data, updates to the operating system, the need to coordinate between service components on the desktop and the server. Now, add to this, the need to add more power on the desktop to support the growing needs for a growing number graphics and computing requirements — and of course power.

What Desktone is proposing is that service providers establish themselves as the provider of desktop capability. Clearly, an emerging player like Desktone couldn’t take on this goal but its partners are stepping up. In my discussion with CEO, Harry Ruda, the company has signed on partners including IBM, Verizon, Softbanks, and T-Systems. These companies all plan to use desktone to offer the virtual desktop as a subscription based service. Therefore, the desktone service provides an annuity stream for companies like Verizon as an alternative to the corporate desktop. Desktone has signed up a few high profile customers like Merill Lynch. Merrill Lynch are signing up for a very simple reason — they simply cannot get any more power in their data centers — even if they wanted to pay for it. Likewise, Verizon, which has substantial data center capacity in New York City simply cannot take on new co-location customers without a managed services approach.

What I found very interesting about Desktone is how the company positions the technology. The company seems want to from the traditional approaches to desktop virtualization right to the world of cloud computing — of course, for the desktop world. I am providing a link to Dana Gardner’s blog on the topic. Unlike some of the clouds that we hear a lot about, Desktone’s version is based on a private cloud that will be owned and run by the serivce providers. The approach is intended to treat the virtual desktop as PCs connected to a service provider that provides the “virtual container” for the desktops. This solves a lot of problems for both Desktone and service providers. In essence, the end customer is responsible for their own operating system and PC application licenses. Desktone is provide a virtual desktop grid — what Desktone called an access fabric. This fabric is intended to provide a management platform for desktop virtualization.

Desktone has an interesting opportunity. It is stretching what we have traditionally thought about for desktop virtualization. While desktop virtualization is not new but it is changing dramatically. One only has to look at the work that VMware, Citrix, IBM, Microsoft and HP are doing — to mention but a few of the players that understand the importance of virtualizing the device in front of the customer. I think that desktop as a service is the right conversation for the industry to be having just about now.