Microsoft Thin-Client Acquisition? Not in a Blue Moon
When it comes to the enterprise thin-client business, Microsoft thinks differently.
By Steve Kaplan, Vector ESP
January 2002
Citrix Systems (NASDAQ:CTXS) saw a temporary, but significant, dip in its stock price on two separate occasions during the past few months based upon a recurring rumor. The gossip, stemming from an October Lehman Brothers report, is that Microsoft is going to enter the Terminal Services add-on market by acquiring New Moon Systems. Citrix analysts routinely poll channel members to get our take on the thin-client business, and they never fail to ask me about the status of this purported acquisition. I explain to them that I believe it is a ridiculous notion.
Microsoft's View of Terminal Services
The analysts, of course, are not concerned about the threat of tiny New Moon's technology. But their acquisition would verify a recurring Wall Street fear that Microsoft intends to invade Citrix' territory, enterprise server-based computing. The market jitters began almost five years ago in early 1997 when Microsoft opted not to license the NT 4.0 server kernel to Citrix, and Citrix' stock price plunged 80 percent before shooting back up. The rumored acquisition is another iteration of this same dark cloud that reappears whenever Microsoft announces a new server operating system version.
Citrix investors and customers can relax. When it comes to the enterprise thin-client business, Microsoft thinks differently. Indeed, their desktop O/S group relies upon the purchase of fat-client PCs to help spur demand for the advanced attributes found in Windows XP such as media streaming and desktop video conferencing. Microsoft will continue to develop Terminal Services with local processing in mind, which means that they will naturally continue to incorporate different capabilities and functionality than Citrix.
The Windows .NET Server 2002 beta indicates Microsoft's commitment to continue concentrating on world-class operating systems while relying on ISVs to build software extensions and develop new markets. Citrix MetaFrame will facilitate the enterprise utilization of Windows.NET Server Terminal Services by adding seamless Windows, server farm fail-over, enhanced printer management, management utilities, scalability and other features.
Microsoft views Terminal Services as an application delivery tool designed to enhance the fat client desktop experience. They consider it a product feature, albeit one that is becoming increasingly important with the advent of Windows XP. If you ask a Microsoft sales representative to see her pipeline list, you'll notice opportunities such as Windows 2000 migration, Exchange 2000 and SharePoint Portal Server. What you won't see is "Terminal Services
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