Citrix will release "a couple of announcements hopefully before the end of the year" detailing which major vendors will preinstall Citrix's XenExpress OEM Edition hypervisor on their servers, according to Matt Haynes, Citrix's director of sales strategies, channels and field marketing. "That OEM strategy will be part of our go-to-market strategy," he said.
The alliances may not move XenSource -- an open source virtualization developer Citrix acquired in August -- into parity with VMware Inc.'s market-leading software, but they should narrow the competition, Haynes said.
The agreements will be similar to the one VMware announced at last month's VMworld, under which VMware's ESX Server 3i hypervisor will be integrated with server hardware from Dell Inc., Fujitsu Siemens Computers, Hewlett-Packard Co., IBM, NEC and others.
The XenSource virtualization product has a tough hill to climb, according to Frank Gillett, a data center and computing infrastructure specialist at Cambridge, Mass.-based Forrester Research Inc.
"In all our surveys we've gotten only one response from a user saying that they use XenSource, and that's out of hundreds of responses," Gillett said.
Gillett also said that the results are not surprising, given that XenSource really only began selling the product this year, but the competition with VMware and Microsoft will be stiff, and server virtualization will be the bigger opportunity for Citrix.
"Citrix will offer a second or maybe a third option, so the package of things together from Citrix will be interesting given a variety of client needs," Gillett said.
He added, "In terms of [Citrix's] opportunity to resellers, the challenge is whether [it] can offer a more attractive opportunity than VMware, and I think that's going to be tough," Gillett said.
Citrix is also crafting a channel strategy to complement its technology and OEM push, Haynes said. Its goal over the next 18 months is to add 1,600 channel partners globally to sell the XenSource XenEnterprise version 4 open source virtualization software.
And, while executives say they want to see large customers adopt the product, Haynes said Citrix is looking for channel partners focusing on midsized companies -- a market that is largely untapped by VMware, and in which XenSource's open source virtualization prices might be more attractive than they would to larger customers, he said.
Haynes also said that within a month the company will roll out its online certification program to train sales and technical people selling the product. Company officials are committed to keeping the open source virtualization structure of the technology and have developed a separate business unit to continue to improve the technology.
Citrix will hold its first server virtualization advisory council meeting this month at its Citrix iForum 07 conference in Las Vegas. The council, which will be made up of XenSource resellers, will be the body responsible for articulating partner concerns -- a voice that is critical to Citrix's success. Haynes said that the company's open source virtualization strategy will be driven in large part by its channel partners.
While Citrix partners face competitive challenges, some see a growing opportunity for the open source virtualization product.
"We have some clients that have been asking for an alternative to VMware," said Larry Letow, president of Glen Burnie, Md.- based Convergence Technology Consulting, a Citrix and VMware partner that is currently testing XenSource and is committed to selling it.
"Citrix has a good channel program so it will be very profitable for us to sell XenSource. We're very excited about it," Letow said.
"You must have a strong channel program and that's something VMware doesn't have," said Jim Steinlage, president of Overland Park, Kan.-based Choice Solutions LLC, a VMware partner that will also be selling XenSource.
Steinlage said he sat on VMware's channel advisory council for two years, and believes if Citrix builds a loyal channel the effects can hurt VMware.
"VMware has done nothing to create a sticky channel," he said, referring to incentives that would encourage channel partners to stick with VMware and resist selling competitive products.
"I and others told VMware 'You happen to be the only thing out there now, but when something else comes along we're going to be gone.' They are doing nothing to keep their channel loyal," Steinlage said.
According to Steinlage, VMware's hardware OEM partners sell maintenance contracts at a lower price than channel companies can; they also undercut resellers by bundling VMware's virtualization technology with servers at discounted prices.
VMware did eventually establish a reward system so resellers would get paid for working on a deal that was taken over by another VMware partner. But the amount is insignificant compared to the size of the deals, Steinlage said.
"With the Citrix Advisory Rewards program, if you are driving an opportunity, no matter what happens you're going to get a substantial reward on the back end," Steinlage added.
Customer costs are another consideration that may drive adoption of XenSource's open source virtualization approach, said Francis Poeta, president of Cliffside Park, N.J.-based P & M Computers Inc.
"XenEnterprise is $3,000 per server with no other costs. For VMware it costs you $6,000 per server plus $5,000 for a management console, which means if it goes down all your machines are useless, and that means you have to have two of them, which costs $12,000," Poeta said.
The product has also been developing quickly enough to satisfy the midmarket customers on which P&H focuses, he said.
"When we started selling XenSource's product in January, it did not have a lot of feature-rich technology, but you look at XenEnterprise version 4 today and it has everything that 80% of the customers could possibly need," Poeta said.
"XenSource is a big market play, and it's going to make a lot of people anxious," Poeta added.