Citrix Can’t Stay Xen as Microsoft Launches Hyper-V

After today’s launch of Microsoft’s server virtualization hypervisor, Citrix, which bought virtualization company XenSource last year, may be asking itself some hard questions. Microsoft’s Hyper-V will compete directly with Citrix’s XenSource products for the data center as well as with products from VMware and startup Virtual Iron.

But Citrix and Microsoft have close enough ties that the move by Redmond into data center virtualization may be akin to your sister stealing your boyfriend. And that could strain their relationship. Industry players have claimed that Citrix may be ready to let Microsoft get away with the theft, and focus instead on the PC virtualization market. Others disagree. I plan to ask Citrix about its Xen business next week when I talk to Simon Crosby, the CTO of Citrix’s virtualization business.

In May it launched a new XenDesktop product for desktop virtualization, and recently saw analysts downgrade its stock or reduce revenue estimates based on slowing sales of its XenServer products. Citrix has also been relatively quiescent when it comes to doing deals while VMware keeps shopping. Speaking at Structure 08 yesterday VMware co-founder Mendel Rosenblum said that competition for virtualization in the data center was inevitable, and VMware is trying to move into management products and ensuring reliability (hence those deals).

Current Hyper-V features appear less competitive than those in products offered by VMware, Citrix and Virtual Iron, but no company can afford to stand still. If Microsoft is on your heels, it makes sense to keep running. Microsoft may arrive late to the race, but its installed base and free downloads mean customers are likely to give it a whirl.