Citrix offers new XenServer pricing 1 April, 2008 By Paul Weinberg

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Customers can have access to a limitless number of virtual machines or guest operating systems on each physical server for a single price regardless of whether the hardware device has one, two or four CPU sockets.

"What we are trying to do is simplify the acquisition of virtualization, and the market that we are strongest right now, which is mid-market enterprise and departmental," stated Simon Crosby, former CTO of XenSource and now CTO of the virtualization and management division at Citrix.

This simplified pricing model means more server hardware sales for "Citrix's OEM friends," he added.

The new offer is being posed as an alternative to VMware's license pricing model which is based on the number of CPU sockets per server, stated Chris Wolf, senior analyst at the Burton Group.

Wolf observed that the Citrix XenServer license pricing model also includes an unlimited of processor cores. What VMware would do when servers start carrying eight cores, now looming on the horizon, is not clear, he said.

"Servers shipping today will have four cores, and vendors like VMware are counting CPUs instead of cores but they have been very noncommittal about what to do once we get to eight cores."

Wolf said he doubted that VMware would alter its license pricing model for sockets in the near future.

"I don't think [VMware] will have an immediate change through their licensing strategy because they dominate the market. They have far away the most market share; they have the most mature platform."

Over the long haul, VMware could issue similar pricing, speculated Wolf. "I could see a change coming, but to just go directly from what they are doing now in this model, I would be surprised, if VMware did that. I think it will take quite a bit of market pressure for them to go in that direction."

Skeptical about the XenServer pricing is Charles King, principal analyst at Pund-IT. He called XenServer "an interesting product" but noted that XenSource, the company Citrix acquired, had little success competing against VMware.

"Though Citrix's pricing is aggressive, the more important issue is the similarity of the products' core features. If VMware's solutions are more capable and easier to deploy/manage than XenServer, I would not expect the company to drastically change its pricing/licensing model."

King added that Citrix's aggressive pricing strategy is typical of a vendor trying to stir interest in new products. "That seems the case here since Citrix Xen Server 4.1 is the first product released since the XenSource acquisition."

VMware should not be complacent, countered industry analyst Joe Clabby, who pointed to how Citrix was the originator and market leader for its terminal services thin client at the end of the last century until Microsoft came along with Terminal Server "which was almost the exact same product, with some notable differences in security and centralized control."

The principal at Clabby Analytics also pointed to Xen's popularity among Linux oriented end user organizations which should help push sales of Citrix XenServer.

"The Linux people like [Xen] because it originated in open source and so they are disposed to it; and Linux people have generally been very price sensitive, so it has certain appeal to your average Linux users."