Citrix acquires XenSource

Citrix just announced the acquisition of XenSource for $500 million. XenSource was obviously for sale – trying to avoid being between a rock (VMware) and a hard place (Microsoft) – but the buyer and the price were a big surprise for me. Which raises few questions:

• Is Citrix desperate? – The core business of Citrix – presentation server – is being threatened by VDI (Virtual Desktop Infrastructure) and other Citrix businesses are still small in comparison. Citrix needed a hypervisor to make its VDI stack complete. Did it need it so desperately that it justified paying half-billion dollars for a company with tiny revenue?
• Will Citrix cross Microsoft? – Good relationship with Microsoft was very important for success of Presentation Server, but is much less important for success of the VDI business, especially when Citrix owns the hypervisor.

  Citrix could partner with Microsoft and use Viridian hypervisor, which will be out in about a year. Even though not as advanced as Xen, it will surely work wonderfully with Windows, and Citrix could care less about Linux. Instead, with Xen acquisition, Citrix followed VMware and entered the platform game, where it will be directly competing with Microsoft not just as VDI, but as a platform vendor.
  

• Is Citrix committed to Xen community? – Citrix is a proprietary Windows company. Xen, on the other hand, has relied on and enjoyed strong support from open-source Linux community. The two philosophies are vastly different and making them work together will be interesting to watch from the side lines.
  

Looking forward to your comments!