Citrix goes virtual with XenSource

Citrix is set to buy virtualisation firm XenSource for $500 million (£251 million), the firms announced today.

Following yesterday's successful stock market debut of fellow virtualisation firm VMware, Citrix picked up the XenSource for cash and stock. Both boards have approved the deal, which is set to close in the fourth quarter of this year.

"We are tremendously excited about the opportunity to add the XenSource products, team and culture to Citrix," said Mark Templeton, chief executive of Citrix. "Incorporating XenSource's dynamic virtualisation services into our application delivery infrastructure will enable our entire product line to be more flexible, agile and dynamic, qualities that have never been more important than they are today."

Xen is a free virtual machine monitor - or "hypervisor" - which was developed as a research project lead by Ian Pratt at the University of Cambridge. Pratt founded XenSource, which sells the enterprise version of Xen and supports the continuing open source project.

"This announcement represents a key milestone for the Xen project," said Pratt. "Citrix is committed to our community and the principles of transparency and neutrality that allow us to work together on the reference standard for virtualisation, promoting the rapid, ubiquitous adoption of virtualisation."

Like the move by VMware, analysts have called the Citrix and XenSource tie-up a wise decision. "The combination of Citrix and XenSource brings together both presentation and server virtualisation to deliver more choice and flexibility to the market, particularly Citrix's strong installed base," said John Humphreys, program vice president of enterprise virtualisation for IDC.

Indeed, XenSource's chief executive Peter Levine said the deal is about taking virtualisation mainstream and expanding the market. "Today is a great day for the virtualisation market because customers will now have a strong alternative that is open, proven and backed by one of the most successful software infrastructure leaders in the entire industry," he said in a statement. "This move is not about competing for the five per cent of the market that is already being served. It's about steering into the 90 per cent white space that is wide open, both at the server and in new emerging opportunities at the desktop."

Citrix said it expects the server and virtualisation market to jump to $5 billion (£2.5 billion) in the next four years.

Following the acquisition, XenSource will become part of Citrix's Virtualisation and Management Division, which Levine will lead. He said in a letter to customers and partners: "XenSource will become the core of a new division within Citrix focused on virtualisation and management solutions. All XenSource employees will join Citrix with roles within the new organisation or elsewhere within Citrix."

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