History

Apparently VMware is in hurry to clarify its channel on how much better its technology is compared to the new Citrix/Xensource platform. And didn’t go soft.

virtualization.info has received a letter addressed to VMware partners just one day after XenSource acquisition which clearly exposes how tough the competition will be:

…

XenSource failed to gain measurable market share. Its upcoming XenEnterprise v4 release still has major shortcomings compared to VMware Infrastructure 3.

Citrix provides impressive technology, but its competencies and resources are not in the field of system-level virtualization, which is what XenSource needs in order to deliver an enterprise virtualization solution.

…

XenSource still cannot deliver the capabilities of 3rd-generation VMware virtual infrastructure. Citrix technology will not fill those gaps. Citrix can only ask customers to wait and forego immediate VMware Infrastructure 3 savings and infrastructure benefits.

The core of the XenSource solution, the Xen hypervisor project, is failing as it splinters into incompatible, proprietary offerings. The Open Source community is shifting support to KVM. Citrix may end up in possession of an abandoned hypervisor.

…

XenSource’s architecture is unproven and less suitable for VDI. An integrated Citrix/XenSource VDI solution will be unavailable for a long time.

…

XenSource only has 500 customers, according to recent statements. Its lack of recognizable reference customers impedes partner selling efforts.

Citrix will need to address XenSource’s limited web-only support model and lack of professional services resources before partners can reliably trust XenSource products with their key customers…

VMware spent many months pushing Citrix VDI solution to its customers, and now finds the company as the biggest competitor, more capable to act than Microsoft.

Citrix may react on such aggression dropping VMware support from its Desktop Server connection broker product.

Two days after VMware IPO and one days since Citrix announcement of XenSource acquisition investors answer this way:

(VMware is compared with its parent company EMC)

(Citrix is compared against its new competitor VMware)

On Microsoft site dedicated to betas, Connect, a new program just appeared: codename Himalaya.

The brief description and enrollment survey reveal it’s a solution to automate patching of powered off virtual machines, a critical feature in large scale virtual datacenters.

Codename Himalaya may become a feature included in further versions of upcoming System Center Virtual Machine Manager 2007.

Enrollment period ends September 9. After that date Microsoft may release more informations about this new project.

Is this Microsoft answer to new VMware patch management solution, Upload Manager 1.0, to be released with upcoming ESX Server 3.1?

Update: Microsoft immediately removed the beta program from Connect.

In a post on its corporate blog, Larry Orecklin, General Manager at Microsoft, announced System Center Virtual Machine Manager 2007 (SCVMM) will be released at the end of this month.

He also hinted that more virtualization products will appear during Q3 2007, which means Microsoft will probably release a first beta of its upcoming hypervisore codename Vidirian in this timeframe.

The virtualization.info Virtualization Industry Roadmap has been updated accordingly.

Formerly called BrandZ, Solaris Containers for Linux Applications is a major improvement in Sun OS virtualization technology included with its Solaris 10.

Sun started this project at end of 2005, as a general framework to allow applications from other operating systems to seamless run inside a Solaris container (aka zone).

First implementation, focused on Linux and interanlly named lx brand, made its way inside OpenSolaris distribution in Septmber 2006. Now, after one year and a half since beginning, Sun is finally ready to include it in official OS code with upcoming Update 4.

Solaris Containers for Linux Applications, as it was finally renamed, will allow Sun customers to run unmodified Linux binaries made for Red Hat Enterprise Linux and CentOS.

The update is expected to be released August 27 at no charge as usual.

Sun was also expected to include Xen in further updates of Solaris, but Citrix acquisition of XenSource may halt this project.

Complexity of ESX Server architecture, using a custom Linux distribution for its Service Console component, always created doubts about how VMware should act to respect GPU license.

After its successful IPO, the topic attracted new interest, at a point that VentureCake assembled a very long and detailed analysis of why ESX should be considered illegal.

Agreeing or not with such analysis, it spread lights on a new and very interesting element: one of top Linux maintainers, Christopher Helwig is openly against VMware and would like to sue the company. In details:

VMware uses a badly hacked 2.4 kernel with a big binary blob hooked into it, giving a derived work of the Linux kernel that’s not legally redistributable. I unfortunately don’t have enough copyrights on that particular version to sue them. I do object to use of any open-iscsi code of my origin to be used with it, though.

VentureCake also reveals how VMware is well aware of this, since Zachary Amsden, VMware hacker, received a direct answer from Helwig about the topic:

Until you stop violating our copyrights with the VMWare ESX support nothing is going to be supported. So could you please stop abusing the Linux code illegally in your project so I don’t have to sue you, or at least piss off and don’t expect us to support you in violating our copyrights.

I know this isn’t your fault, but please get the VMware/EMC legal department to fix it up first.

Read the whole VentureCake analysis at source.

Read Slashdot discussione about it here.

Quoting from IT Week:

Oracle has admitted it is “too complicated” to develop a licensing model that accounts for software running on virtual servers, despite the growing adoption of virtualised environments at many large enterprises.

Speaking yesterday, Oracle president Charles Phillips said that customers remained happy with Oracle’s current licensing model, which is predominantly based on physical machines running the software.

“We license by the physical partition as there is no way we can know what [customers] are doing with [the machine],” Phillips said. “It is too complicated to do it any other way.”

…

Last year, Oracle modified its licensing to account for rising adoption of multicore chips, but Phillips suggested changes to deliver “virtualisation pricing” are unlikely…

Read the whole article at source.

At today Oracle is one of the major ISVs not recognizing virtualization technologies and not adjusting its offering accordingly.

Tents of roseate forecasts issued by top research analysis firms, VMware successful IPO and XenSource acquisition by Citrix don’t seem to change this state of facts.

And customers definitively don’t remain happy with current licensing model, as Oracle President reports, talking more about a nightmare.

virtualization.info recognizes virtualization-unfriendly licensing scheme as one of top issue negatively affecting virtualization adoption, and lists it at second place in Virtualization Industry Challenges report.

The Register yesterday’s scoop has been confirmed today with expected official announcement by Citrix, which contains key informations about open source project Xen, Microsoft-XenSource relationship, XenSource other partnerships:

Citrix Systems, Inc., the global leader in application delivery infrastructure, today announced a definitive agreement to acquire XenSource, Inc. of Palo Alto, Calif., a privately held leader in enterprise-grade virtual infrastructure solutions, for approximately $500 million in a combination of cash and stock, which includes the assumption of approximately $107 million in unvested stock options. This acquisition moves Citrix into adjacent server and desktop virtualization markets, expected by Citrix to grow to nearly $5 billion over the next four years.

…

The acquisition is expected to close in the fourth quarter of 2007 subject to the satisfaction of closing conditions.

…

Today’s acquisition announcement comes on the heels of a substantial new release of XenEnterprise, the company’s flagship commercial product line powered by the Xen engine.

…

Version 4 will further accelerate an installed base that has more than doubled in the last 90 days to over 650 customers.

…

Upon close of the acquisition, the XenSource team and products will form the core of the new Virtualization & Management Division of Citrix dedicated to building and growing these important new businesses. Peter Levine, XenSource, CEO, will lead the new division, reporting directly to Mark Templeton, Citrix president and CEO. Under Peter’s leadership, Citrix is also committed to maintaining and growing its support for the Xen open source community, led by XenSource co-founder and Xen project leader, Ian Pratt. Between now and the close of the acquisition, XenSource will work with the key contributors to the Xen project to develop procedures for independent oversight of the project, ensuring that it continues to operate with full transparency, fairness and vendor neutrality – principles that are critical to the continued role of Xen as a freely available open source industry standard for virtualization.

…

The acquisition will also strengthen each company’s strong partnership with Microsoft and commitment to the Windows platform. As an independent company, XenSource has built a strategic relationship with Microsoft designed to ensure broad interoperability between XenSource products and the upcoming Microsoft Windows hypervisor, code named “Viridian”. This relationship complements and broadens the successful partnership between Citrix and Microsoft in the Windows application delivery, application networking and branch office infrastructure markets.

…

Assuming the transaction closes as expected, the acquisition is expected to add approximately $1 million in revenue and $3 million in cost of revenues and operating expenses to fiscal year 2007. The acquisition is expected to add approximately $50 million in revenue and $60 to $70 million in total cost of revenues and operating expenses to fiscal year 2008. The transaction will also result in approximately an $8 to $10 million non-cash expense charge for the write-off of in-process research and development in the quarter in which the acquisition closes…

Before acquisition XenSource received $41.5 million from venture capital backers Accel Partners, Ignition Partners, Kleiner Perkins Caufield & Byers, New Enterprise Associates and Sevin Rosen Funds.

Citrix stock (CTXS) didn’t perform well despite the acquisition news, starting today at $32.49, gaining 3% when announcement was made, but closing with a -1.5% (altought after hours trading are bring a +3.04% at time of writing).

virtualization.info published a preliminary analysis of how this acquisition may impact the virtualization market here.

The virtualization.info Virtualization Industry Radar has been updated accordingly.

Launched at $29, VMware stock (VMW) closed its first trading day at incredible price of $51, with a further growth of over 13% during its second day, closing at $57.71 (and reaching $58 during after hours trading).

Meanwhile its parent company EMC, which lost amost 4% yesterday, loses again today another 1.09%.

Quoting from The Register:

Citrix will announce its acquisition of XenSource tomorrow, The Register has learned.

In a bid to expand its software management play, Citrix will grab the developer of the open source Xen hypervisor. The deal will give XenSource heftier corporate backing needed to compete against VMware.

Read the whole article at source.

If confirmed this is the biggest announcement in virtualization industry so far for several reasons.

First of all hardware virtualization market is going to see three huge contenders: VMware, Microsoft and then Citrix. The acquisition is going to create even more competition between Microsoft and historical partner Citrix, despite existing deals between Redmond giant and XenSource.

Secondly it’s a critical point to understand what will happen now of Xen as open source project, since most of its developers are XenSource employees. And most of all what will happen to Virtual Iron, which is basing its platform on Xen, and to Red Hat and Novel, which are embedding Xen in their distributions.

Virtual Iron may need to fork Xen to stay on business, while Novell and Red Hat may want to drop Xen support and turn to KVM, which is already integrated in Linux kernel.

This is probably the best moment for this acquisition: today’s VMware IPO raised a new awareness around virtualization, XenSource is becoming highly competitive with new features introduced in just announced version 4.0, and Citrix alread owns other virtualization technologies: its own presentation virtualization, and application virtualization obtained with Ardence acquisition last year.

But most of all Citrix needed a new way to hold a strong market position: upcoming Windows Server 2008 will introduce enhancements to Terminal Services, making more difficult for a lot of companies additionally acquire Citrix technologies. Citrix is well aware of this and it’s extending its offering to different segments since a while. Acquiring an hypervisor like XenSource would grant the company a remarkable positioning in the most profitable IT market at the moment.

Anyway Citrix would have to face open source community reactions to acquisition, which may consider Xen project destiny too uncertain to support it anymore, and turn to KVM all together.

In any case Qumranet, the company with develops KVM, will suddenly become the most interesting virtualization startup of the moment, and its first commercial product, expected for end of September, will be expected with much more interest.