Citrix Competing VMware

What a contrast Citrix Systems and VMware make in the server and desktop virtualization arenas. And who would have guessed that Citrix would have been the more profitable company in the most recent quarter?

But it’s true. Even though VMware is a somewhat larger company, Citrix trumped them thanks in large part to its vast installed base of 230,000 enterprise customers using products such as its XenApp middleware (formerly known as Presentation Server) and a slew of other software gadgets.

In the second quarter ended June 30, Citrix had sales of $392.8m, up a meagre three-tenths of one per cent when compared to the same quarter last year. Product license sales plummeted by 15.5 per cent in the quarter to $129.7m, but thanks to that legacy customer base, license update sales rose by 8.8 percent to $149.3m.

Citrix’s growing online services offerings accounted for $75.35m in sales, up 18.3 per cent, and technical services came in at $38.45m, up 3.1 per cent. Despite having to take a $2m restructuring charge resulting from layoffs announced in January, the company nonetheless was able to boost net earnings by 22.7 per cent to $42.5m.

VMware, by contrast, yesterday said that its sales were down one-tenth of a per cent to $455.7m and its net income was driven down by the cost of doing business by 37.8 per cent to $32.5m.

Citrix is trying to take on VMware on a number of different fronts. The company has enlisted Microsoft’s Hyper-V and its Windows monopoly money as a means of peddling the Essentials family of hypervisor management tools that also work on its own XenServer.

This collusion between competitors helps Citrix and Microsoft take on VMware’s technically slick but overpriced ESX Server 4.0 and related vSphere 4.0 tools, much as commercial Linux distro Novell has done deals with Microsoft to peddle its SUSE Linux to Windows shops so that both vendors can blunt the attack of Red Hat, the market leader in Linux just like VMware is the market leader in virtualization.

David Henshall, chief financial officer at Citrix, said in a conference call with analysts and reporters that revenues from desktop and server virtualization products – meaning the XenDesktop virtual PC hosting software plus the XenServer server hypervisor and the tools to manage it – saw a 250 per cent bump in the quarter compared to the prior year, and were up 50 per cent sequentially from the first quarter of 2009.

Plurk This Post Delicious Digg This Post MySpace Ping This Post Reddit This Post Stumble This Post