Some Brutally Honest Thoughts on Citrix’s Defection

When I first heard the announcement about Cloud.com being spun off into the Apache foundation, my initial reaction was to interpret the event as a hostile move by one of the OpenStack community insiders. Citrix is one of the founding members of OpenStack, with representation on the project policy board; the company has been quite active evangelizing the community through various events and code contributions. So why, all of a sudden, a move that may appear to undermine the OpenStack momentum?

Let’s take a look at the history. When Citrix bought Cloud.com for more than $200 millionin July, 2011, insider information suggested the company had revenue of only a several million. While high valuations were not uncommon in the cloud space, a 40x revenue multiple is quite unusual. Why did Citrix do it? The only answer that comes to mind was that it wanted to quickly gain credibility in the cloud market.

I believe that corporate politics and relationships also played a role in this deal. Cloud.com was backed by Redpoint Ventures, which had an existing track record of selling itsportfolio companies to Citrix. But, more importantly, Cloud.com founder and CEO – Sheng Liang – was also the founder and CTO of Teros Networks, a Web security company that was acquired by the very same Citrix just a few years before Cloud.com was founded. In fact, I am pretty sure, that in some sense cloud.com was Citrix’s skunk works project; acquisition by Citrix was the key part of the Cloud.com business plan. While there is nothing wrong with the approach and I can only complement the strategy, the early connection between Citrix and Cloud.com was key to its successful exit and the events that followed.

Just one year before the acquisition of Cloud.com, OpenStack was announced at OSCON and nobody knew what to think of it. It took the open source community by a storm and it soon became evident to all those competing for open cloud dominance, that simply ignoring the OpenStack phenomenon was not an option. “Open cloud strategy” soon became synonymous with the “OpenStack Strategy”. Citrix, a founding member of OpenStack itself, was in a bit of a tight spot. One choice was to abandon its Cloud.com project. Given the OpenStack momentum at the time, this could inevitably translate to the swift death of Cloud.com and $17 million in losses to the VCs backing it. Alternatively, Citrix could go all in, acquire the Cloud.com community to boast its credibility in the open source cloud space and take a stab at creating the dominant distribution of OpenStack, ultimately becoming to OpenStack what Red Hat has become to Linux. In the end, the scales tipped towards the latter option. In May, 2011 Citrix announced its distribution of OpenStack – project Olympus. Two months thereafter, the Cloud.com acquisition was announced.

However, when the dust settled, it became evident that Citrix’s involvement with Cloud.com and OpenStack (Project Olympus), instead of being complimentary as Citrix has anticipated, has been perceived as strange and surprising. CloudStack is Java based, whereas OpenStack is all Python. On the compute side, CloudStack focused on Xen, whereas the dominant hypervisor for OpenStack so far has been KVM. CloudStack was licensed under GPL, and OpenStack under Apache 2.0. Ultimately, Citrix’s cloud.com acquisition was sending confusing messages to both communities and Citrix’s customer base. A few months after Citrix’s acquisition, the Cloud.com community had little momentum left. At the same time, the OpenStack community remained wary of Citrix due to its involvement with CloudStack. Consequently, not much has happened with Project Olympus since its announcement over a year ago until it was officially abandoned with the latest announcement.

Today, Citrix announced that Cloud.com will find a new home with the Apache foundation. Is it a hostile move that will undermine OpenStack? I see it more as an act of desperation. Clearly, that wasn’t the initial plan, when Citrix first acquired Cloud.com. Consequently Citrix has failed to build the community around Cloud.com, miscalculated the synergies between the two communities, got trumped by OpenStack momentum, and dumped what’s left of Cloud.com to the Apache foundation. They have already announced CloudStack would be open source twice before, yet have received no outside contributions to date. The last commit to Cloud.com on GitHub by a non-Citrix employee is dated several months ago.

At this point, Citrix has a spotty history when it comes to open source. Open source is built on trust and they are hard to trust right now. Having burned bridges at their last two communities (Xen / Linux) and now OpenStack, it is going to be big challenge for them to revive CloudStack from its present semi-dead state.

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