Citrix Acquires Cloud.com: An Analysis

Citrix (previous CloudAve coverage), the virtualization player who is gaining some decent traction recently, today announced the acquisition of Cloud.com (previous CloudAve coverage), the open source cloud platform player with considerable traction on the side of Telcos, Service providers and even enterprises. Initially, Citrix will push the Cloud.com product lines and Citrix branded versions will be available in the future versions. In this post, I will do a quick analysis of this news and try to offer an overview of the federated cloud space from the perspective of this acquisition.

My POV on the news

My first reaction was “Wow” and my more relaxed and well thought out reaction was “this has to happen and it is good for this market segment”. Let me first startle readers with a bold prediction that there is a danger of an “open source monopoly” developing in this space. Imagine the combo of Citrix + Cloud.com playing a significant role in OpenStack. This could turn out to be a potent combo that could take down all the other players in the space including some of the big companies who are trying hard. As I have pointed out in a post earlier, Cloud.com has considerable traction and they are the ones to beat in the service providers market.

Cloud.com is, clearly, having tremendous momentum in the service provider market which, so far, is not matched by other players in the space. They are also getting traction in the enterprise space with one big customer being Zynga (their Z-Cloud is built using CloudStack) but they are the ones to beat in the service provider market.

This acquisition makes Citrix a credible player in the space and gives them an opportunity to take a lead over VMware in the cloud infrastructure segment (yeah, it is far fetched but a realistic possibility). After struggling a lot in their earlier quest to make a credible cloud play, Citrix can now move ahead with a considerable momentum.

How this market segment is shaping up?

So far, we don’t have a single player with a runaway lead in the market. This is not going to change considerably even though Citrix will now have newer advantage and considerable momentum. Even though VMware is trying hard with their vCloud Director offering, the momentum from Cloud.com is transferred to Citrix and their participation in the OpenStack gives them even more momentum and credibility. If Citrix play their cards right, they can emerge as a leader eventually but it is a big if and it is dependent on many other factors. With System Center 5, Microsoft has also taken steps to stop any large scale migration of their customer base to other cloud providers. However, they still have to get their messaging right before they can stir up more interest from organizations wanting to move to cloud. Their traction on the service provider side is going to be limited to few large players who can afford to buy their Windows Azure Appliance. Today’s news is going to impact Eucalyptus and other smaller players very hard and it will be interesting to see how they maneuver themselves to stay competitive in the future.

Impact on competitors

In this section, let me try to expand on my thoughts above and try to analyze the impact on different players in more detail. I am selecting the players based on my familiarity with them and also based on how they had competed with Cloud.com in the past. I do acknowledge that there might be other players who deserve attention but this is just a blog post and not a research report. I can always discuss the missing players in future posts.

VMware: VMware (previous CloudAve coverage), the company which had considerable lead in the virtualization era, has been struggling with their cloud strategy so far. Their vCloud Express didn’t take off as expected and their efforts with vCloud Director is still not paying dividends in the way they would have liked. Their cloud infrastructure story is still considered to be a meh but the interesting aspect of VMware’s cloud strategy is that they have moved past the cloud infrastructure game into PaaS and SaaS. In my opinion, they are going to compete hard in these layers of the stack than in the IaaS layer. However, I want to point out that I am writing this analysis before the VMware webcast for a cloud infrastructure related announcement today and there are widespread expectations that it is going to be interesting. This might change my analysis a bit but I will come back later to discuss the announcement. Right now, Citrix can make the competition really hard for VMware.
Citrix: After calling VMware’s cloud strategy deadwood, Citrix (previous CloudAve coverage) had trouble coming up with their own credible cloud strategy. Even though they gained some credibility after they went onboard with OpenStack and their recent Project Olympus announcement, the chances of Citrix making it big on their own were remote. Since the new Citrix CloudStack is going to have OpenStack at the core with Cloud.com’s platform playing a role at the Orchestration layer, we are essentially going to see a two pronged cloud strategy with their own cloud push and, also, as a major player in the OpenStack ecosystem. I am still not sure what they have done with their VMLogix acquisition and whether it will see light in the new Citrix CloudStack but some of the folks from VMLogix are going to be part of the new Cloud Platforms Product Group. As I told earlier, if Citrix play their cards right with Cloud.com, they are going to make a very strong play in this space
Microsoft: After being completely clueless about how they are going to compete in the enterprise private cloud market and service providers market, Microsoft (previous CloudAve coverage) has taken the necessary steps to establish themselves as someone whom their existing enterprise customers will approach first while considering a move to cloud. System Center 5 is a right step but they still have a long way to go in terms of messaging. They also face the dilemma of killing their current cash cow for future security. I am still not convinced that they have the right service provider strategy. Microsoft may have to do lot of catching up with Citrix on the service providers side
Eucalyptus: Once upon a time, before OpenStack became the household name, Eucalyptus (previous CloudAve coverage) was the hottest startup in the space. But their momentum has considerably slowed in 2010 and, also, in 2011. In fact, Marten Mickos, CEO of Eucalyptus, promised me that there will be lot of momentum for them in 2011. I am still waiting for them to get rolling. I was expecting Redhat to acquire them and it didn’t happen. With Citrix acquiring Cloud.com, their path became even more steeper and we will have to wait and see how they respond
OpenStack: It is clearly a win-win situation for OpenStack (previous CloudAve coverage), the open source cloud infrastructure project started by Rackspace and NASA with more than 50 companies in the ecosystem including Citrix (one of their biggest contributors). Since OpenStack is going to be at the core of Citrix CloudStack, any success achieved by Citrix is a win for OpenStack. They also have other players in the ecosystem who can offer solutions comparable with Cloud.com and this gives them a chance to independently target the same users Citrix will be targeting. The next year is going to be very interesting for OpenStack and they are going to score big independent of any Citrix contribution
Other big players: Even though big companies like CA and BMC are trying their best to be strong contenders, it is still in early stages for them. It will be interesting to see how they put their resources to use in order to gain market share
Other Startups: There are many startups in this space who were competitors to Cloud.com in the past. Chief among them are Cloupia, Nimbula, Abiquo, Gale, etc.. I am yet to speak with many of the startups in this space but based on my conversations and observations, Cloupia and Abiquo are having some good momentum. Cloupia seems to be gaining traction in the converged infrastructure space and Abiquo, after some initial mis-steps, have put their act together to gain traction. Nimbula is playing a different game from other players in the space. They are targeting greenfield applications built for the cloud. It will be interesting to see if they can convince enterprises to embrace their strategy. Gale, Intellio, Hexagrid, Flexiscale, etc. are also playing hard in this space. The next 2-3 years will decide the fate of all these startups and other players. Just like in the case of Eucalyptus, Citrix’s acquisition of Cloud.com is going to make the climb steep for these players. We will have to wait and see how it plays out

Conclusion

Overall, this is a great move by Citrix and it is also a validation for the idea of Federated Clouds I am pushing here in the blog. It is going to greatly help this thesis because Service Providers can now rely on an open source solution from a big name player. This is going to make the space much more competitive and the players are going to innovate hard to stay relevant through the tough competition. Congratulations to the entire Cloud.com team including fellow CloudAve ~~blogger~~ bro Christian Reilly, who recently joined them.