Blog post

Citrix buys

By Lydia Leong | August 11, 2011 | 1 Comment


(This is part of a series of “catch-up” posts of announcements that I’ve wanted to comment on but didn’t previously find time to blog about.)

Recently, Citrix acquired The purchase price was reported to be in the $200m+ vicinity — around 100x revenues. (Even in this current run of outsized valuations, that’s a rather impressive payday for an infrastructure software start-up. I heard that VMware’s Paul Maritz was talking about how these guys were shopping themselves around, into which some people have read that they ‘had’ to sell, but companies that sell themselves for 100x trailing revenues don’t ‘have’ to be doing anything, other than sniffing around to see if anyone is willing to give them even more money.) (formerly known as VMOps) is one of a great many “cloud operating system” companies — it competes with Abiquo, OpenStack, Eucalyptus, Nimbula, VMware (in the form of vCloud Director), and so on. By that, I mean that you can take and use it to build cloud IaaS of your very own. While you can use to build a private cloud, the reason that commanded such a high valuation is that it’s currently the primary alternative to VMware for service providers who want to build public cloud IaaS. is a commercial open-source vendor, but realistically, it’s heavily on the commercial side, not the open-source side; people running in production are generally using the licensed, much more featureful, version. Large service providers who want to build commodity clouds, particularly on the Xen hypervisor (especially Citrix Xen, rather than open-source Xen), are highly likely to choose’s CloudStack product as the underlying “cloud OS”. We’re also increasingly hearing from service providers who intend to use to manage VMware-based environments (using the VMware stack minus vCloud Director), as part of a hypervisor-neutral strategy.

Key service provider customers include GoDaddy and Tata Communications. A particular private cloud customer of note is Zynga, which uses to provide Amazon-compatible (and thus Rightscale-compatible) infrastructure internally, letting it easily move workloads across their own infrastructure and Amazon’s.

Citrix, of course, now has a significant commitment to OpenStack, in the form of Project Olympus, their planned commercial distribution. The acquisition is nevertheless complementary, though, not competitive to the OpenStack commitment. provides a much more complete set of features than OpenStack — it’s got much of what you need to have a turnkey cloud. Over time, as OpenStack matures, will be able to replace the lower levels of its software stack with OpenStack components instead. For Citrix, though (and broadly, service providers interested in VMware alternatives), this is a time-to-market issue as well as a solution-completeness issue.

In my conversations with a variety of organizations that are deeply strategically involved with OpenStack and working in-depth on the codebase, consensus seems to have developed that OpenStack is about 18 months from maturity (in the sense that it will be stable enough for a service provider who needs to depend on it to run their business to be able to reasonably do so). That’s forever in this fast-moving market. While Swift (the storage piece) is currently reliable and in production use at a variety of service providers, Nova (the compute piece) is not — there are no major service providers running Nova, and it’s acknowledged to not be service-provider-ready. (Rackspace is running the code it got via the acquisition of Slicehost, not the Nova project.) Service providers want to work with proven, stable code, and that’s not Nova right now — that’s (Or VMware, and even there, people have been touchy about vCloud Director.)

It’s not that the service providers have a deep interest in running an open-source codebase; rather, they are looking for an alternative to VMware that is less expensive. currently fills that need reasonably well.

Similarly, it’s not that most of the members of the OpenStack coalition are vastly interested in an open-source cloud world, but rather, that they realize that there needs to be an alternative to VMware’s ecosystem, and it is in the best interests of VMware’s various competitors to pool their efforts (and for vendors in more of an “arms merchant” role, to ensure that their stuff works with every ecosystem out there). Open source is a means to an end there.’s stack, whether commercial or open source, is only a benefit to the OpenStack project, in the long term.

This acquisition means something pretty straightforward: Citrix is ensuring that it can deliver a full service provider stack of software that will enable providers to successfully compete against vCloud — or to have hypervisor-neutral solutions peacefully coexist, in a way that can be easily blended to meet business needs for a broad range of IaaS solutions. While Citrix would undoubtedly love to sell more XenServer licenses, ultimately the real money is in selling the rest of its portfolio to service providers — like NetScaler ADCs. Having a hypervisor-neutral cloud stack benefits Citrix’s overall position, even if some customers will choose to go VMware or KVM or open-source Xen rather than Citrix Xen for the hypervisor.

It certainly doesn’t hurt that’s Amazon-compatible APIs (and thus support of RightScale’s functionality) is also tremendously useful for organizations seeking to build Amazon-compatible private clouds at scale. No one else has really addressed this need, and VMware (in an infrastructure context) has largely targeted the market for “dependable”, classically enterprise-like infrastructure, rather than explored the opportunities in the emerging demand for commodity cloud.

In short, I think is a great buy for Citrix, and VMware-watchers interested in whether or not their vCloud service provider initiative is working well should certainly track wins vs. vCloud wins in the service provider space.

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1 Comment

  • Lili Balfour says:

    Lydia – Great article. I’m curious where you found’s revenues. I imagined they were closer to $20 mil at time of acquisition.