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News and insights from the vibrant world of virtualization and cloud computing

IBM / Cisco Eyeing Acquisition of Citrix?

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Good thing we have a ‘Rumors’ category to assign to this type of speculations: several news outlets are running a story about Citrix possibly being an acquisition target for Cisco or IBM.

Citrix logo

A late April fool, or plausible?

Nasdaq traders bid up Citrix stock Tuesday on takeover rumors that have either IBM or Cisco purchasing the application delivery vendor.

Citrix’s stock went from a low of $30.60 Tuesday to a high of $33.75. Rumors of Citrix being purchased fueled the higher trading prices, says Jeffrey Gaggin, an enterprise software analyst for Avian Securities. Gaggin cautions that he has no way of knowing whether the rumors hold any truth.

But it would make sense for IBM or Cisco to purchase Citrix because Citrix’s acquisition of XenSource last year made it a strong player in the virtualization market, Gaggin says.

TheStreet adds the following financial analysis:

But even at what seems like a bargain price, Citrix isn’t cheap: With a market cap of $6 billion and expected revenue growth of 17% to $1.63 billion this year, the stock could command a fair premium, taking the potential buyout price north of $7 billion, assuming a premium of 15%.

IDC analyst Stephen Elliot sees some rationale for IBM and Cisco to go after Citrix. IBM could make the XenSource hypervisor its preferred brand and could better compete against VMware and Microsoft. This would run counter to H-P’s strategy, which has professed to being indifferent on the hypervisor question, Elliot said.

On Citrix’s side, IBM would lend “a lot more credibility” to the XenSource virtualization platform and provide development resources. “There are a lot of opportunities,” Elliot said.

[Source: ChannelWeb]

Google And Microsoft Set To Battle In The Clouds: App Engine vs. Red Dog

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Lots has been written already about Google’s new initiative called App Engine, a preview-release developer platform for Python applications, and now Microsoft seems to be throwing itself in the ring – where Amazon and Salesforce are also to be found – in order to get at least a piece of the cloud computing buzz momentum. LiveSide spotted a job posting with clear mentions of the Microsoft Utility Computing Platform, code-named Red Dog, and it sounds very much like a platform for building a Google App Engine type service.

LiveSide’s take:

“The posting itself is a little dense, written to appeal to seasoned developers looking for new challenges. But to paraphrase a bit, here’s what the (CIS) team is building with Red Dog:

  • an “efficient, virtualized” environment
  • a “fully automated service management system” (like the Google App Engine, you won’t have to worry about managing the system)
  • on “highly scalable” storage services (you only use the storage you need)
  • the service will “scale to millions of machines” across Microsoft’s data centers (geo-located, easy to maintain data centers, remember?)
  • “will lead the marketplace as the best platform for rapid development, deployment, and maintenance of internet services and applications”
  • SDK and tools will be included for external and internal customers
  • V1 for external customers in the coming year

Meanwhile, Gartner analysts Daryl Plummer and Thomas Bittman reportedly stated at the Gartner Emerging Technologies conference in Las Vegas that it will be another year – 2009 – before companies will start using cloud computing services extensively. “In the meantime, folks will have to define and sort out a lot of mumbo jumbo about the cloud.”

Interesting times!

IDC Virtualization Forum West: Simon Crosby (Citrix / Xensource)

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This article is part of a series of guest posts by investor, Open Source pioneer and the creator of the Concurrent Versions System Brian Berliner. The original posts, recapping much of what was said at the IDC Virtualization Forum West in San Francisco, have also been published on Brian’s blog.

Simon Crosby, formerly the Founder & CTO of XenSource and, since the acquisition, now the CTO of the Virtualization & Management Division at Citrix, did a very nice job with the morning’s kick-off sponsor presentation at the IDC Virtualization Forum West conference.

Some takeaways that I found interesting:

  • Virtualization is not an end-goal in and of itself. Virtualization is a feature set and simply serves a role in IT Application Delivery.
  • Simon took a few jabs at VMware and, why not? Citrix/XenSource is now squarely positioned as the #2 contender. When you have the chance, you take a shot at the big boy. And, VMware is a big boy, to be sure. Simon said, “This is the year the world strikes back” (against VMware, I presume).
  • Simon also said, of one of the sleeping dogs in the Virtualization space, “Microsoft is going to radically change the environment for virtualization”. Presumably with their Hyper-V solution and their partner muscle.
  • About the movement of the hypervisor into the firmware of server (and at some point), client computers: “Where this feature ends up is still in play — in the OS, or in the hardware”. Personally, I think the answer is clear. Hypervisors are becoming commoditized and will become a component of the hardware/firmware/BIOS. It can’t be stopped.
  • Citrix will create a set of Open Extension API’s for Value Added Dynamic Infrastructure Services. Basically a way for third-parties to interact with the lower layers as part of building a truly dynamic data center (which, EVERYONE is talking about getting to at the conference) – Something that we predicted while building the business plan for Cassatt in 2003. The industry/market is absolutely catching up.
  • I think I heard that XenDesktop will be released in Q2 of this year (i.e., soon).
  • On the issue of scaling the virtual desktop infrastructure: “When I talk about scale, the Desktop scales way worse than any Data Center”. He cited a customer example where the customer has 250,000 desktop PC’s. They absolutely DO NOT want to have 250,000 Virtual Machines! The Citrix approach to scale here is intriguing (and quite likely correct): Break the OS from the Configuration from the Applications. Assemble them in real time for the desktop virtual machine. Result is 1 (or a handful) of OS images that you have to deal with and patch in order to update thousands of desktop machines. Much better scale solution.

I liked what Simon had to say about the virtualization landscape. It is very clear that the choice of Citrix as their acquirer was a good one. Lots of good synergies between the companies.

I had lunch with Simon as well, and we continued the discussion. I was impressed with his understanding of the customer requirements and political challenges to the rollout of a virtualized infrastructure.

[Original post can be found here]

IDC Virtualization Forum West: John Humphreys

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This article is part of a series of guest posts by investor, Open Source pioneer and the creator of the Concurrent Versions System Brian Berliner. The original posts, recapping much of what was said at the IDC Virtualization Forum West in San Francisco, have also been published on Brian’s blog.

At the IDC Virtualization Forum West Conference, John Humphreys, Program Vice President of the Enterprise Platform Group at IDC shared some more detailed thoughts on the virtualization markets (great presentation, BTW).

Further takeaways include:

  • Of the customers that are doing virtualization in their data centers today, IDC says that 22% of servers have already been virtualized, with an expected rise to 45% in 12 months. Note that Gartner claims that the overall virtualized server market share is 5%. Which means, to me, that there is a whole lot of headroom for virtualized server growth.
  • Power & Cooling account for $0.50 for every $1 spent on servers, or about $29 Billion annually.
  • Roughly $8 in maintenance spent for every $1 in new infrastructure.
  • “Server consolidation” is already appearing to be “old news”. Now “Desktop Consolidation” is hot – the ability to serve up the desktop client image from a central location, and all the centralized admin goodness that comes from that. IDC notes a number of challenges, like the fact that moving the desktop client images into the data center results in 20-30% cost of storage increase (I would think it would be much more, personally), due to the additional network storage requirements; There are still challenges with running the virtualized OS legally (if you are not already a Software Assurance volume pricing customer, that is; who wants to buy another retail copy of Windows just to serve it up from the central data center?); And, performance of the remote desktop protocols can be poor for some client workloads. IDC specifically mentioned Qumranet and their SPICE remote connection protocol as potentially addressing some of these performance issue.
  • Virtualization appears to be solving the complexity problems that surround the deployment of “clusters” in the data center. And, I completely agree. I’ve set up many, and they are way too complicated. And virtualizing is way too easy. Death to clusters!

My thought on the Virtual Desktop Infrastructure topic: Today’s desktop computers are extremely powerful and should not be used as dumb terminals that just do “Remote Desktop” access. You need to find a hybrid approach that allows you to use the power of the desktop client (and all that lovely disk drive space on the client). Once clients start being delivered with a built-in hypervisor (which is not too far away), you could argue that you might be able to treat the client as a server. Then, there is just the matter of managing the Virtual Hard Disk images. Using a CacheFS would be one very easy way to do so (transparent local storage that can be taken offline with automatic server-based backing I/O).

The Citrix folks have an interesting approach to this, including both the ability to “stream” an application load to a diskful and stateful Windows client, OR to deliver a server-hosted virtual machine through a remote protocol connection. Choice. Choice is good, as one size will not fit all customer environments for client desktop management. Check out the Citrix Delivery Center.

[Original post can be found here]

IDC Virtualization Forum West: Keynote by Matthew Eastwood

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This article is part of a series of guest posts by investor, Open Source pioneer and the creator of the Concurrent Versions System Brian Berliner. The original posts, recapping much of what was said at the IDC Virtualization Forum West in San Francisco, have also been published on Brian’s blog.

I attended the IDC Virtualization Forum West 2008 conference today. It was kicked off by Matthew Eastwood of IDC. He shared some of the IDC analysis of the virtualization markets.

Some takeaways that I found interesting:

  • Worldwide IT Spending on Servers + Power + Cooling currently at about $55 Billion annually.
  • Data centers continue to grow with new server purchases annually (and relatively fewer servers retired annually, so absolute growth appears to never end).
  • Server Management & Admin costs are rising at 4x the rate of new server acquisition growth, while Power & Cooling is growing at 8x the rate.
  • Number of Rack “U” used annually increases 25x to 15.4 Million servers – this is 365,000 racks representing $15 Billion, with an additional $30 Billion going to Power & Cooling requirements.
  • IDC conducted a survey where they asked IT customers about their interest in “Green Data Centers”. Result, with n=191, was that 37% would Favor A Green Supplier, 51% thought Green would Help With Compliance, and 81% felt that Green Strategies would help to reduce OPEX.

So, lots of discussion about the need for Green data centers, and the huge amount of Power and Cooling costs that directly affect operating expense. A dynamic and adaptable data center can provide that. In fact, that’s what Cassatt’s Active Power Management and Active Response products do.

Go save the planet. Or, at least increase your corporation’s earnings. That’s important too.

Disclosure: I am a Founder and shareholder of Cassatt.

[Original post can be found here]

Is Virtualization The Biggest Security Vulnerability In IT Today?

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The question is asked by Senior Reporter from Forbes Andy Greenberg, who attended the security industry’s big annual confab, the RSA Conference, and wrote up an article aptly titled ‘Virtualization Dark’s Side’. He writes:

“In the past few months, security researchers have revealed bugs in practically every piece of virtualization software, including products from virtualization heavyweights VMware and Microsoft.

Exploiting those bugs, attackers can use what researchers call “virtual machine escape,” or “hyperjacking.” By taking control of the hypervisor, the piece of software that controls all the virtual computers within a machine, an attacker can “escape” from any single virtual computer hosted on the machine and quickly multiply his or her access to a company’s data.”

Virtualization security researchers and experts were quick to point out the weaknesses of virtualization and several techniques to breach the security.

Joanna Rutkowska, the founder of security research firm Invisible Things Lab, reportedly described a new type of virtualization-based malware that could be used to take control of a machine running virtualization software. Because virtualization allows companies to store many virtualized software “images” of computers on a single physical machine, an attack like the one Rutkowska envisions would allow a hacker “not only to control a single machine but to siphon data from any virtual machine it contains”.

Rutkowska also described how an intruder could install what she calls a “blue pill,” a second, malicious hypervisor that controls the original hypervisor and all of the virtual machines beneath it.

Fortunately, she also said that the attacks she discussed are likely too new to have ever been used by real-world cybercriminals, and are unlikely to become common.

What do you think?