Citrix's Vision for the Virtualized Enterprise

The Company

Citrix

Headquarters: Fort Lauderdale

Employees: 4,000

2008 Revenue: $1.58 billion

CEO: Mark Templeton

What They Do: Citrix is best known for XenApp, its application virtualization software. The company also offers popular load balancing, online meeting and remote support tools. In 2007, Citrix bought XenSource and its commercial version of the open-source server virtualization software Xen (now XenServer).

The Catch

Started by ex-IBM staffers in 1989, when companies were moving from mainframes to personal computers, Citrix made its coin with software that would deliver applications to end users over the network. Today, "on the application virtualization front, it remains Citrix's market to lose," says James Staten, a principal analyst at Forrester Research.

However, when most CIOs talk virtualization, they're still talking about servers, not applications. Despite the maturity of its XenServer product, analysts say Citrix is playing catch-up. VMware has a lock on the market since it supplies more than 75 percent of today's deployments, according to IT research firm Info Pro. XenServer "has minimal share today," Staten says. Microsoft is gearing up its virtualization efforts with Hyper-V, for which Citrix itself offers advanced management tools, and open-source vendor Red Hat plans to offer a server virtualization product this year.

"It is VMware and Microsoft that will battle this out," Staten says. While the market is anything but saturated, he adds, other enterprise software vendors already see XenServer as running in third place and thus plan to commit fewer resources to qualifying their solutions for it.

The Score

This is not to say XenServer doesn't have benefits. Citrix reps tout the platform's range of features and say its open-source roots make it easy to integrate with other technologies. Its low deployment cost may appeal to small and mid-size businesses, Forrester's Staten says, which are now the next frontier for server virtualization.

And servers are only one aspect of the virtualization value proposition. The next project for many CIOs may be virtualizing desktops.

"There are between 500 and 620 million Windows desktops, and they're all less efficient than the servers we just spent four years replacing with virtual machines," says Rachel Chalmers, an analyst for The 451 Group. Thanks to its experience in this arena, Citrix has some advantages over VMware, Chalmers says.

For CIOs, a chat with Citrix can be worthwhile, especially for companies making investments in application or desktop virtualization. For server virtualization, many IT shops could find VMware to be the better bet, analysts believe. But if XenServer's capabilities fit, the lower cost may well tip the scales in its favor.

The Pitch

Everyone now knows that by unlocking applications from specific servers or desktops, virtualization enables them to be grouped together to save hardware costs. Citrix aims to extend these benefits across the enterprise with products that unhitch the software from the underlying hardware platform. "We think of our business as virtual computing, from the desktop to the data center," says Wes Wasson, Citrix's chief marketing officer and senior vice president for product strategy.