To Save its Skin, Citrix Makes Quick Leap for XenSource

2 minute read
Angela Natividad avatar
As speculation over the VMware IPO heats up, so too does the tapdance of VMware's competitors.VIrtualization competitor XenSource -- having last month developed a storage relationship with Symantec -- is now the center of attention for Citrix, which is allegedly looking to acquire Xensource for US$ 500 million, according to The Boston Globe.Not without reason. In 2006 XenSource signed an agreement providing it with access to code for Microsoft's Viridian. After a couple of promised, then withheld, beta releases, followed by disappointing news that it would launch without some promised features, Viridian is next due to debut in 2008.Citrix has worked closely with Microsoft for a number of years. And firms like the 451 group even think that Microsoft may purchase it.Unlike VMware, which is owned by major enterprise CMS purveyor EMC and slated to make US$1 billion in revenue at the end of '07, XenSource is a young firm with an annual revenue of less than US$ 5 million.Which makes Citrix's offer of US$ 500 million seem a little steep. However, Citrix surmises that XenSource will generate US$ 50 million in sales next year. With that said, one can only assume the firm imagines XenSource will be paying for itself in a handful of years.Either way, Citrix seems like a good place for a virtualization firm to set its roots. The company builds applications that run remotely so users can access them with ease and less expense. Its clients include call centers and other corporate bodies.The firm is only slightly larger than VMware, which posted sales of US$ 555.5 to Citrix's US$ 642 in the first half of 2007. This means the latter had better hurry if it wants to remain competitive in the enterprise market, as VMware is all too rapidly becoming a remote-use hardware and software giant.The sale of XenSource to Citrix is expected to finalize in Q4.VMware's share price of US$ 29 has doubled rapidly since its IPO early this week. Zealous spectators have dubbed it the new Google. We don't know about all that, but we're definitely going to be watching closely.

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