In recent years, Citrix has executed a number of fundamental changes that refocus and reposition XenServer as a platform for cloud infrastructures and desktop virtualization more than data center use. More recently, though, Citrix has also shown it will respond to market feedback. With the release of XenServer 6.5 in January 2015, numerous features have been brought back from retirement, or avoided retirement or deprecation.
Irrespective of these moves, it is clear Citrix is no longer investing to keep up with market leaders VMware and Microsoft — at least for traditional server virtualization in the data center. Instead, it is focusing on making XenServer an attractive hypervisor for cloud infrastructure (optimizing integration with its own CloudPlatform offering) and for desktop virtualization (supporting XenDesktop and XenApp).
For cloud infrastructures, the Xen hypervisor will remain the most widely used architecture for public infrastructure as a service (IaaS) cloud providers, if for no other reason than it is used by Amazon Web Services. The goal for Citrix is to leverage cloud providers to grow its business with Citrix CloudPlatform (the commercially supported version of Apache CloudStack). Enterprise adoption of open-source cloud infrastructure remains nascent, and Citrix’s strongest competitor in terms of technology and market perception is OpenStack, which has traditionally been associated with Kernel-based Virtual Machine (KVM). Moving XenServer to full open source was a required step not only to become competitive in this market, but also to potentially rejuvenate community investment in XenServer. At the same time, Citrix continues to demonstrate its commitment; it manages the open-source project and community for XenServer. However, while CloudPlatform has several hundred customers (about half being service providers, which makes monetization challenging), Citrix has hurdles to overcome. These include the community support, industry buzz and vendor marketing muscle being put behind OpenStack. Unless Citrix can increase its own community, or gain alliances with major vendors, it will struggle.
In desktop virtualization, XenApp and XenDesktop are widely used, but VMware vSphere continues to be more broadly used as the underlying hypervisor. Citrix, with a free back end, has an opportunity to reduce VMware’s influence and to potentially make Citrix-only desktop and server virtualization attractive (especially with smaller customers). While this is a good defensive strategy for Citrix, monetizing this strategy for growth remains a challenge. Furthermore, the growth of Hyper-V as a back end adds another challenge.
Citrix and Microsoft have an intriguing relationship. While Citrix supports Hyper-V and has a long-term partnership with Microsoft, winning at the desktop layer is important if Citrix wants to further expand its management, automation and cloud business. As a result, Citrix’s go-to-market strategy regarding how XenServer both competes with and complements Hyper-V remains confusing for many customers and channel partners. Regardless, it is apparent that Citrix is willing to sacrifice the server platform to maintain its desktop virtualization business.
For server virtualization alone, the reduction in virtualization functionality weakened XenServer’s competitiveness. XenServer 6.5 addresses most of these concerns. However, Gartner inquiries on XenServer for server workload virtualization have declined. Time will tell if the repositioning in XenServer 6.5 is enough to rejuvenate market interest for enterprise server virtualization.
The success of CloudPlatform or XenDesktop/XenApp is less reliant on the success of XenServer; however, as a core underlying virtualization technology for these products, XenServer can potentially help accelerate Citrix’s success in both areas, and enterprises can rely on Citrix to maintain investments in XenServer that specifically help their CloudPlatform or XenDesktop businesses.
- XenServer is a good product offering at zero cost (except for paid support).
- Citrix has a large opportunity in the telecom and cloud service provider markets that rely heavily on open-source Xen today.
- Citrix has a large reseller channel.
- Marketing execution and reach are limited for XenServer, while industry perception favors competitors.
- Citrix faces open-source software (OSS) competition from KVM and OpenStack, and it must further develop the community and vendor support.
- XenServer does not have a strong business model for monetization to cover future investments.