With Citrix Synergy taking place this week in Las Vegas, let’s take a moment to step back and remember the Citrix of yesteryears.
Founded in 1989, Citrix came of age in a world where Steve Jobs led NeXT and cellphones were the size of bricks. The software startup climbed to the top ranks of the thin client technology space throughout the '90s, propelled by massively successful remote access products for Microsoft.
The name Citrix became synonymous with flexible working. But in the last few years the company has become unrecognizable.
'Losing Focus is Never Good for a Business'
In Jan. 2015, Citrix announced plans to lay off more than 900 people. The fall of 2015 brought more restructuring, along with the announcement of the GoToMeeting spinoff. Citrix has so far exceeded performance expectations in 2016, but that hasn’t been enough to put the company ahead of competitors like VMware. Meanwhile, disruptive startups like Workspot are pushing hard to grab market share without the complications of legacy programs.
CEO Kirill Tatarinov seemed to concede in an interview with TechTarget that the company is no longer what it once was, “Citrix was allowed to be disrupted in the past, and our job is to not be disrupted again,” he told Colin Steele of TechTarget. “Losing focus is never good for a business.”
Factors Leading to Citrix's Disruption
We can trace Citrix’s disruption to mistakes in three areas: size, development and cybersecurity. Regaining control of these areas offers Citrix its best shot at renewed innovation, if it’s still possible.
In the 2000s, Citrix did what every other tech company was doing at the time: it snapped up relevant startups until it grew into an unwieldy organization with too many arms. The company lost focus. Many companies lived out this same M&A phase and in recent years we’ve seen those companies get divorced. eBay and Hewlett-Packard are two notable examples.
In its break-up, Citrix eliminated its XenClient Type 1 hypervisor; Melio, a virtualization product; and Citrix Labs, the company’s Australia-based research wing. GoToMeeting was slated to go its own way, while Mark Templeton, Citrix’s then CEO, decided to go his.
Citrix’s new CEO Kirill Tatarinov is aiming to get the company’s name back in the same conversations as Microsoft, IBM, Salesforce, Oracle, Google, Amazon and Apple. The only problem is those companies — excluding Microsoft and IBM — had exceptionally strong decades. Citrix had the necessary components for growth at the time, but did not know where it should spend its energy.
Only time will tell if new CEO Tatarinov has the right instincts to configure an organization with a focus that is not too big, nor too small.
Citrix has poured resources into developing Citrix Workspace, its offering for the emerging cloud-based workspace management market. It’s an aggressive move for a company that faces stiff competition from both technology giants and nimble startups.
In the virtualization landscape, those businesses that are comparable in size to Citrix — namely VMware — have a solid growth streak on their side. These years of growth coincide with some tough years for Citrix sales.
Since its corporate overhaul, Citrix’s numbers have suggested the company is on the mend. Numbers from Q1 indicate 10 and 17 percent year-over-year revenue increases in product licenses and SaaS, respectively. Total revenue for Citrix was $825.7 million.
VMware also announced year-over-year revenue growth, though its growth rate was more modest (5 percent). Its total revenue, on the other hand, was $1.59 billion.
VMware is a fearsome rival in and of itself, but factoring in smaller organizations, we start to see just how noisy the virtualization space has become. The virtualization startups may not have the extensive resources of a larger corporation like Citrix, but they are free of the tethers of legacy protocols.
The freedom to build up and experiment using agile methods has allowed mid-market vendors to gain an impressive foothold, leaving very little room for first-generation tech companies. Citrix needs to maximize its resources edge by modernizing development. Rethinking software strategy will help Citrix keep pace with agile up-and-comers.
Delivery of basic data security to customers remains the biggest concern for Citrix. In an interview last month, Tatarinov told Network World, “We’re providing a secure solution that was developed for business.” Yet, three months prior, Citrix suffered a massive data breach.
A Russian hacker who goes by the pseudonym “W0rm” was able to gain access to the content management system behind Citrix’s websites. “W0rm” and a separate cybersecurity firm both notified Citrix of the flaw, but the company never responded.
As Information Age put it, “Hackers could've gained access to every Citrix customer's computer - and Citrix didn't notice a thing.” The system was compromised using a very insecure username-password combination, email@example.com and Citrix123. If Citrix wants to be seen as the VDI market leader, it must learn from the “W0rm” breach and practice far better cyber hygiene.
What the Future Holds for Citrix
We owe a lot to Citrix for laying the groundwork for the virtualization space, however, we do not necessarily owe Citrix the future.
With competition coming from all directions, there’s intense pressure for Citrix to optimize its structure, speed up development and secure customer data. Will it be able to accomplish it all?
If Citrix wants to survive, the answer must be “yes.”