Citrix partners drive growth in desktop, server virtualization markets

Citrix credits its growing partner base for a $7 million increase in XenServer and XenDesktop revenue last quarter.

Sales through Citrix Systems partners boomed last quarter, driving growth for the virtualization vendor's XenServer and XenDesktop product lines.

XenServer and XenDesktop revenue for the quarter ending Sept. 30 was up $7 million from last year. The majority of those sales came through Citrix partners, senior vice president and chief financial officer David Henshall said during the company's quarterly earnings call. The number of repeat resellers almost quadrupled during the quarter, and there are now 3,300 Citrix partners authorized to resell XenServer, he said.

Citrix partners said channel saturation is always a concern, but they see enough opportunity to go around in the desktop and server virtualization markets.

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"I don't think the pool's going to get crowded, at least in the near term," said Shannon Snowden, associate consulting partner for New Age Technologies in Louisville, Ky.

"I think [this growth] is a great thing," said Francis Poeta, president of P and M Computers in Cliffside Park, N.J. "They need more partners selling it. More people talking about it is better for the virtualization market."

As other technology vendors struggle to meet financial expectations in these tough economic times, it could be virtualization's time to shine, according to Citrix partners. Server virtualization in particular can help businesses reduce costs by consolidating physical servers, saving floor space in data centers and cutting energy consumption.

"Of all the things you do in IT, this is the most substantial way to save money," Snowden said.

Poeta agreed, but he said Citrix can't rely on partners alone to succeed in an increasingly crowded server virtualization market.

"In this economy, Citrix has a better shot if they go out and attack," he said. "The price point is right. The technology is right. Now it's a matter of getting out there and singing their own praises."

A complicating factor is the close relationship between Citrix and Microsoft, which recently entered the server virtualization market with its new hypervisor, Hyper-V. Both vendors have said they can remain partners while competing at the same time. But as more observers look at the server virtualization market as a two-horse race -- Microsoft vs. VMware, the market leader -- Citrix runs the risk of falling behind.

"If they don't go directly after Microsoft, they're not going to look like they're a player," Poeta said.

Michael Keen, senior solutions architect for Citrix partner Alliance Technologies in Des Moines, Iowa, defended the company's marketing strategy but also said Citrix is trying to get partners to promote XenServer more.

"Their marketing machine, they do great things," he said.

This week's Citrix Summit, an exclusive, invitation-only conference for Citrix partners, illustrated the recent growth in the Citrix partner program. At the event, Citrix said half of the attendees were first-timers, according to Snowden. The company also emphasized how its products work together, and how solution providers can integrate them to increase value for their customers -- a message that likely contributed to the increase in repeat resellers last quarter.

"Citrix's direction is really clear, and it's simple to understand," Snowden said.

Citrix was long known for its XenApp and Presentation Server products, and the challenge now is to get more customers interested in software like XenServer. Training partners to try and steal business away from VMware probably isn't the best approach, Keen said.

"It's hard to beat up the 900-pound gorilla in the room," he said.

Instead, Keen said Citrix should acknowledge that most customers have mixed-vendor environments, and teach partners how its products can fit into those sites.

"Give the partners some ammunition," he said. "If you want them to talk about why XenServer is better, then give them the tools."

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