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Virtualization Strategy : Is Microsoft planning to acquire Citrix eventually?

The bigger acquisition(s) is yet to come. I can bet you this time that this prediction of mine will come true! Although I suggest that Microsoft will acquire Citrix, the answer maybe written in blue letters. OK think like a "good integrative strategist", this one time, with me.

Phase I: Have someone buy Xen who is complementary to our business

This doesn't work as easy as it may seem, Citrix is a complementary to Microsoft's business but also is a challenger. A subdued one in the past but a stronger one now. A curve-ball trick and also a newer, possibly, a better way to slow down VMware's growth. VMware has already a 85% lead and is on its way to its own next-level strategy, that could be building "ESXpress for Mobile Devices", "ESXlite, ESXStandard and ESXtreme versions for desktops" . ESXlite was my prediction long before you really heard of ESXlite. This following poll is a lot older than the first news when Dell's VESO (which is what you will find if you search TarryBlogging for "esxlite") story. The poll is here (created on 15th December 2006) :

Now "ESXStandard" will have to be developed to battle Citrix head-on, a lot of firms are in dire need of a reliable, well performing desktop that has capability to handle multiple vDesktops on a single pc or even better a laptop, this is something I will be porposing to clients myself by revamping the "conventional desktop provisioning" and replacing it with "mobile vDesktops" or some fancier word like "Vorkplace". The last product, "ESXtreme", in my opinion, is the most significant in terms of value creation. HPC is getting closer to masses and and a HPC machine that is "powered by ESXtreme hypervisor" may just be the answer. The world is getting into more complexer and complicated technologies, forget stuff like Oracle RAC and such, it will be far more revolutionizing than that, think genetics, astrophysics, mindworks, multi-dimentional analysis of swarm collection pools etc. This will be able to handle more complexer and Xtreme (pun intended) operations. Also they will be commoditized so we all can contribute to a "greater cause" than "running software", this is where swarm intelligence comes in.

Anyways it might seem to you that I am gushing over what VMware will be considering but it is more of a warning for competitors that it may not be easy to beat VMware, a firm that is constantly in competition with it's inner self! You have to know what you are up against!

So again phase I is to make sure that we get to buy a firm that is complementing our business.

I will tell you why:
  • Have someone do the virtualization business who already has a lead in the marketplace (Citrix had a lot of experiences around VMware or should I say vice versa): The same reason, why my prediction of Novell doing the proxy buy for Microsoft to buy XenSource fell off.
  • Do proxy first*, this is not 90s: Have someone else take the heat and slow down VMware, Microsoft suffered considerable reputational damage, in my opinion, when they were unwilling to budge with the licensing and support. You need a legitimate reason to compete, and Citrix is one!
Phase II: Develop own home grown Virtualization product
  • Co-develop or do it single-handedly: Now this can either be to independently develop your product, again this is not a good move, so the partnership with XenSource should get more meaningful than it has been. Don't cut corners, no "my way, high way" but respect the player who may have the ability to topple VMware.
  • Buying time while the giant is slowing down
  • Confuse markets and push Citrix-XenSource Solutions in the consumer's face!
Phase III: Acquire Citrix , go "legit head-on"

Phase II is in many ways risky and Phase III should follow very quickly. Why?
  • Simply because VMware will continue to baffle you with their products and offerings. They will continue to make market areas irrelevant and help existing customers move on to the "next level strategies" while convincing the "not so ready" or "baffled" new customers to move on to their "greener and conscientious infrastructure platform".
  • Big Blue Black Hole coming at you, baby!: IBM has to do more things than develop mainframes, sure acquiring new clients who want servers who run peta flops (DOD deal, for instance) and help you secure some revenue but it won't last long. Swarm intelligence will soon be a necessary evil. Markets will continue to suffer, budgets will be constrained and other innovations will follow suit. Don't forget that we will continue to consolidate, corporations will have to get leaner to survive and within innovations , they might just vanish! Besides firms like IBM and Microsoft ought to think on the "hip" reputation that they don't have anymore. Getting a cooler technology might get you into "hip" circles again.
I have deliberately avoided any linking, except the one for IBM, to have to stay focused and listen to what I think may happen (OR should happen). We are in very interesting times and there will be a lot of hyper-disruptive moves and acquisitions. IBM may not sound like the right party to acquire Citrix but may just well do so. Besides a symbolic home coming to the mother ship (Citrix was founded by ex-IBM folks) it might also help IBM redefine its "New Future".

Microsoft might look like the right candidate to buy Citrix, given the complementary nature of Citrix but might just not happen since they might move into a new business themselves, should they see no reason to get into Virtualization, and that is web obviously. And also remember Citrix may have done this acquisition to get more into spotlight as an "acquirable candidate". Some have speculated that SAP and Oracle should grab Citrix. I am still betting on the Big Blue. So, Sam Palmisano, if you are listening, you know it is time for a second round of "Blue is Back" since Gerstner's tenure.


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