Ladies and Gentlemen,
Do you want the real story?
It seems that there is general misunderstanding about Citrix's position and deal with Microsoft. I thought this was publicly known and understood:
- The main issue that I think people are misunderstanding about the deal is what Microsoft gets out of it. There is great suspicion that they would leave anything on the table for Citrix. Bill Gates is a man of strategy and Microsoft fosters little ego when it comes to technology. If they have to, they will scrap their own work and buy outside. Microsoft still believes strongly in the fat client model but, just in case, they are establishing a position in the thin client world. They don't know what the future holds and do not know which paradigm will prevail. Nobody knows. Probably both will prevail in there own right. Microsoft has put a foothold into thin with Hydra to establish a position.
- The best example that I can give is backup software. Microsoft has backup software included with all their OSs. The software isn't that good or practical for production use. Companies like Cheyenne, Seagate, etc. have focused on this specific area and made software that so much better than Microsoft's that most buy Arcserve, etc.
- Should backup software become critical to Microsoft's success ( success isn't defined by Microsoft being able to make a buck, otherwise they'd make backup software, antivirus software, fax software, etc. now) strategically as a company, they will put all efforts behind it.
- So far, the only thin-client computing that is having any practical success is Winframe. So, Oracle, Sun and all the others are of no current threat. Should any become viable, Winframe/Hydra is the defensive weapon. That's why Microsoft wanted control over the core technology and required Citrix to agree to first right of refusal on selling itself. Otherwise, there would be a threat that Sun, Oracle, IBM, etc. would buy Citrix and control a crucial counter-weapon that Microsoft would need.
- Microsoft needed to make a deal with Citrix or otherwise fall behind while trying to build thin-client core and risk that Sun, etc would gain a lead.
- Citrix got out of the deal a unique, very advantageous position. People are going to get Hydra as part of the "enterprise" version of NT for free. Anyone that wants to use it for real will need/buy Picasso. It doesn't make sense not to, a good Winframe server (I've written countless specs) costs 20/30/40 thousand dollars depending on the need. The 5k(current cost of Winframe) to make it work well is incremental. Few serious MIS departments are going to balk. That's why the guy from Barron's said that 90% are going to buy Picasso.
- Now, we have complete NT market penetration which blows open doors for Citrix to sell to. Citrix is basically riding Microsoft's marketing coattails. Citrix has Microsoft paying for development, distibution and marketing of Winframe. Also, Citrix no longer pays licensing fee to Microsoft; Microsoft pays licensing fee to Citrix.
- Now everyone worries that Microsoft will make their incarnation of Winframe so good that people will pass on buying Picasso. Not likely. They(Microsoft) have little reason to. Why not let Citrix make their money. It doesn't hurt Microsoft and users have to buy NT Enterprise in the first place(just like when one buys an NT version of backup or antivirus software).
- The probable reason Microsoft didn't buy Citrix outright lies in two areas. One, bad publicity and lawsuits last year. Two, Citrix is making deals with Sun, IBM, etc. to use ICA. This basically gives Unix, etc. users a portal into the NT environment to use Microsoft products. In other words, a guy with a Sun workstation can now type his reports using Word 97. Analyze spreadsheets with Excel. Etc. Anti Microsoft guys would have never made a deal with Microsoft to give access to their users to use Microsoft products.
- And this is where Microsoft make its money, sales of Office and productivity software(and you thought it was off of NT and 95 OS software, it ain't - go look at their financials).
So, that's the story. I hope that I've helped somebody. By the way, where has Roger been? I think he's a great asset to this thread. I wouldn't blame him for leaving(too many were being rude). I hope he comes back.
-N |
