Citrix buys to step up VMware competition

Updated: Citrix Systems (s ctxs) has bought hot private-cloud startup, a move that immediately makes Citrix a leader in the quest to help companies build on-premise Infrastructure-as-a-Service clouds à la Amazon (s amzn) EC2. brings with it an impressive list of customers that includes the standard service providers as well as Bechtel, GoDaddy and Zynga.

Citrix has been trying to establish itself as a private-cloud provider, but it hadn’t had the IaaS component, other than some management tools for its XenServer hypervisor. changes that with its CloudStack product, which gives Citrix those capabilities immediately. Citrix recently announced Project Olympus, a commercialized version of the OpenStack project of which Citrix is a primary contributor, but apparently it did not want to wait until later this year for such a product to become available and then wait even longer for the product to establish itself as reliable.

Still, during a press call announcing the news, Sameer Dholakia, the GM of Citrix’s new Cloud Platforms product group, said the company remains very committed to OpenStack. is an active OpenStack contributor as well, and its own software comes in an open-source version. Dholakia called the acquisition a “doubling down” on OpenStack, if anything, because Citrix will ensure tight compatibility among OpenStack, its own Project Olympus software and CloudStack.

The whole goal, he said, is to create viable alternatives to clouds based on VMware’s (s vmw) proprietary vSphere and vCloud products, so that numerous products give customers more choice. Of course, it’s also a wise business move to buy, not only because it’s successful but also because it saves Citrix from relying too heavily on OpenStack for its cloud strategy. That space could get crowded, as we saw yesterday with the launch of Piston Cloud Computing, an OpenStack startup founded by the chief architect of NASA’s Nebula cloud. CEO Sheng Liang will continue to lead the design, architecture and development of the CloudStack product line, and Christian Reilly, a former cloud architect at Bechtel who recently joined in an executive role, will serve as the chief cloud architect for the new Cloud Platforms division at Citrix.

Update: Although the price of the acquisition wasn’t disclosed, this seems like a good exit for the Cuptertino, Calif.-based, too a source familiar with the deal suggested it was within the $200 million to $250 million range reported by TechCrunch. The company, which started its life called VMOps, closed an $11 million Series B round in May 2010, and it is rumored to have raised $17.6 million overall from Index Ventures, Redpoint Ventures and Nexus Venture Partners. If the price wasn’t right, almost certainly could have ridden the venture-capital wave for another round, thanks to its big customer wins and growing mind share lead over its fellow private-cloud startups, including pioneer Eucalyptus Systems.

Here is our video interview with Satish Dharmaraj, an early backer of


And here is Dharmaraj discussing the potential cloud bubble on a VC panel at our recent Structure conference:


Image courtesy of Flickr user jemasmith