Home > Uncategorized > Citrix Systems Acquires Cloud.com to Challenge Rivals VMware, Amazon

Citrix Systems Acquires Cloud.com to Challenge Rivals VMware, Amazon

Citrix Systems Inc. (CTXS), a maker of computer-networking software, agreed to buy startup Cloud.com Inc. for an undisclosed price, gaining software that helps businesses shift more computing tasks to data centers.

The acquisition will let Citrix customers run cloud- computing software faster and more cheaply, Fort Lauderdale, Florida-based Citrix said today in a statement. The deal propels the 22-year-old company into cloud-infrastructure software, which may reach $8 billion in sales by 2013, Citrix said.

With Cloud.com, Citrix is going after the so-called private-cloud market — cloud-computing services that companies run on their own machines. For instance, a business’s branch office would connect to a corporate data center in a different location. Service providers also use Cloud.com’s software to host computing jobs for customers.

“It’s a swing at the next generation of cloud,” Citrix Group Vice President Sameer Dholakia said in an interview. Instead of just getting software delivered as an online service, information-technology departments are using remote data centers to handle more of their computing needs, he said. “What software as a service did for traditional enterprise software, cloud is doing for traditional IT infrastructure.”

The acquisition puts Citrix into closer competition with VMware Inc. (VMW) and Amazon.com Inc. (AMZN), companies with different approaches to cloud computing. VMware, which is hosting an event today to announce new products, leads the market for virtualization programs. They make software more efficient, so it can run on fewer servers.

Amazon Web Services

Amazon’s Web Services software, meanwhile, lets companies inexpensively run their programs on its servers, instead of requiring them to own the machines themselves. Microsoft Corp. (MSFT)’s Windows Azure software also is aimed at this market, which analysts call “infrastructure as a service.”

Cloud.com’s customers include Zynga Inc., GoDaddy.com Inc., Nokia Oyj, Tata Consultancy Services Ltd. and South Korean telecommunications company KT Corp.

Zynga, the top developer of Facebook applications, relies on the software to handle traffic from its games. At Nokia, researchers use it to quickly set up and run programs on servers, then return the programs to a central research pool when done, said Peder Ulander, chief marketing officer for Cupertino, California-based Cloud.com.

CloudStack Program

Cloud.com’s CloudStack software lets programs automatically draw on separate computing and storage devices to do their work. The software can be half to one-tenth as expensive to run as VMware’s and Microsoft’s cloud-computing products, said James Staten, an analyst at Cambridge, Massachusetts-based Forrester Research Inc.

“If you build your cloud on VMware or Microsoft, you’re sharing your profits with those guys,” he said.

Citrix established itself in the 1990s with software that helps Windows personal computers run older applications stored on servers or mainframe computers. That allowed companies to shift to PCs while protecting their earlier investments. Citrix still gets most of its sales from this kind of desktop- networking software.

Citrix’s sales growth has rebounded from the recession, helping drive up the stock 77 percent over the past year. Revenue is projected to rise more than 15 percent to $2.16 billion this year, based on analysts’ estimates in a Bloomberg survey. Citrix shares dropped $2.82, or 3.6 percent, to $76.37 at 4 p.m. New York time in Nasdaq Stock Market trading.

In 2007, Citrix paid $500 million to acquire XenSource, which makes virtualization software that lets companies combine the work of many servers onto fewer machines to save on hardware and labor costs. The division that includes XenSource posted about $300 million in sales last year.

Citrix’s new Cloud.com software will work in conjunction with the XenSource’s XenServer software, the company said.

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