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Was Citrix's acquisition of a defensive move?

There's a lot of speculation in the cloud market about why Citrix purchased this week, including talk of Citrix trying to edge out VMware.

Citrix agreed to pay $200 million for this week. That's a lot of money for a three-year old company with a handful of customers and $20 million in venture capital backing.

Such deal jockeying is of interest to IT pros weighing a move into the cloud: They want to know where to place their bets when the time comes.

Word has it that rival bidders drove up the price with Valley sources naming a veritable murderer's row of suitors including Dell, Red Hat, Cisco and VMware.

Steve Herrod, VMware's CTO, flatly denied the rumors pertaining to his company, but execs at his level are well-trained in the art of dodging M&A questions. There is also talk that was beating out VMware's vCloud Director in deals, but most of that comes from diehards. Henry Robinson, senior director of product management at VMware, said the real competition for vCloud Director is orchestration tools from CA, BMC and HP. Translation: It is getting beaten in deals, just not by startups.

That's interesting, as Cisco has partnerships with CA and BMC around exactly those orchestration tools. Owning would have given Cisco tighter control of this piece of the stack. No word from Cisco on whether it was bidding for or not. But that's no surprise.

The networking giant already stepped into the Infrastructure as a Service game with its purchase of NewScale, a service catalog that is the part of the stack that customers of cloud computing services actually touch. The real "magic" that comes with automated cloud services happens below this layer with products like Other startups in this area include Eucalyptus, Abiquo, Nimbula, Enomaly and Joyent. It's crowded. Watch for Cisco to make a move here, and possibly VMware if the vCloud Director rumors are true.

Dell is a contributor of OpenStack, which has yet to gain traction, so could bolster that effort. For Red Hat, a buy might be a "take-out" move since competes with Red Hat's recently announced CloudForms effort.

On the technical side, tongues are wagging over why Citrix would target when it seems so committed to OpenStack. At its Synergy conference in San Francisco last month, Citrix unveiled "Project Olympus," a commercial distribution of OpenStack slated to ship by year-end. made lots of noise about OpenStack -- Peder Ulander, VP of marketing at, said the goal is to eventually merge the code base of's CloudStack with OpenStack, but that's all hot air right now. The fact that the team leans heavily on Java while OpenStack is Python-centric means that a merger doesn't make a lot of sense.

Experts say doesn't do anything meaningful with OpenStack and won't be able to unless it does close to a complete re-write. It could be that Citrix bought to hedge its bets in case the OpenStack community dissolves into bitter infighting among all the competing vendor interests.

Or, it could be Citrix just liked the domain name. You've got to admit, it's a good one.

(Editor's note: This story was updated Friday morning with information on other suitors.)

Jo Maitland is the Senior Executive Editor of Contact her at [email protected].

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