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January 15, 2008

VMWare acquisition validates Citrix focus

Today's announcement that VMWare has acquired Thinstall speaks volumes. And despite what you might think, this is great news for Citrix.

First, some background. Thinstall virtualizes elements of the Windows operating system like files and registry hives, so applications install and run in a "sandbox" without impacting other apps or system components. Their virtualization framework gets packaged in along with the application executable and DLLs, which means there's no software required on the endpoint. Applications don't have to be installed, they just run. And since each app gets its own sandbox, you don't have to worry about Application A causing problems with Application B.

In other words, Thinstall solves the same set of problems as Microsoft SoftGrid and the Application Streaming feature of Citrix Presentation Server.

Clearly this extends the competition between VMWare and Citrix. Both companies are out pitching solutions for virtual desktop market (VMWare VDI, Citrix XenDesktop) as well as the virtual server market (VMWare ESX, Citrix XenServer). The acquisition of Thinstall illustrates VMWare's desire to compete in the App Delivery market too.

VMWare understands that the hypervisor is on a path to commoditization, that they have to expand their solution set through acquisitions to solve more problems than server consolidation (and do so as quickly as possible before their P/E ratio comes back to earth). And they are right to be looking up the stack toward the application as the direction to move. As Citrix has been saying for years, applications are the central unit of thought for IT managers, the raison d'etre for IT. Applications alone make IT relevant to the business.

Why this is good news for Citrix

Yes, this means competition against the mainstream Citrix product portfolio, which at first blush looks like bad news for Citrix. But the move only validates that the Citrix story around app delivery is moving from a relative niche market where Citrix enjoyed 80% market share into the mainstream IT market that will be shared by multiple large vendors. As VMWare, undeniably the hottest technology IPO of 2007, enters this market, it raises the visibility of what Citrix has been doing all along: virtualizing application access. I would expect to see more acquisitions related to app delivery over the next year or two, and it would also follow that as the app delivery market matures and consolidates we will see more innovation and lower prices.

App Delivery is Citrix turf. Thank you, VMWare for shining the spotlight on our corner of the data center!