Cisco’s play: Will it do an Oracle with Citrix takeover?
By Tarry Singh at 21 April, 2009, 12:58 pm
One thing I can tell you for sure. If Cisco does come close to acquiring a virtualization vendor, it may go for Citrix. Why? Check out these opportunities:
Hardware business is going to be commodity soon as software gets resilient (Grid-aware)!
Software, remember that word. Simply if you want to believe me or any of my close researcher and leading business leader friends (They all have written great books, have been fund managers, have successfully led/funded companies and are more reliable than me), then we are today standing at what most folks would call a “Structural Destruction Area“, I personally would like to call it a “Structural Deconstruction Area“.
Hardware business is consolidating fast and this time Cisco may get an edge over it’s competitors such as IBM, HP etc by doing the double/triple/quadruple whammy by doing more than just a UCS thing. UCS will be soon defeated as other vendors will soon go after their own boxes and/or purchase other network suppliers to build boxes. Current economical conditions are rather favorable for other competitors as they can always play the FUD game and maintain their customer base. All-in-one solution is what you’ll need.
Hardware business is also soon to lose out on the commodity, easy to build hardware stack and a more lucrative business will go to software. Software will get cheaper and commodity software and hypervisors, which are mere resource providers, will be built in for free, they already are. Next whammy Cisco can do is with the ownership/stewardship around the Xen. That would give Cisco the power of humanising the network and the data centers like never before. This is an opportunity and buying Citrix will also give it the software and all the components of the Cloud it needs to speed up connections. Citrix has rich stuff in its Wanscaler and Netscaler and other offerings that connect folks is variety of ways. All that pieces of puzzles that Cisco needs will be filled by the application delivery stack on its UCS offerings.
Software will reign supreme. Repeat after me, Software will reign supreme.
Learn from Oracle : Virtualization landgrab - Commodity hardware and commodity hypervisors to reign supreme
Oracle is soon bound to acquire Red Hat, if it doesn’t then the equalizer can be played out by EMC, which may feel jilted by the Sun acquisition (Oracle may quietly spend its development teams to work on the Sun’s storage). We don’t know that yet, maybe VMware will float as an independent company and do the Red Hat acquisition itself. I for one have not been convinced by VMware’s acquisition strategies. They are rather poor and they have had a hard time integrating other products.
“Learn from Larry”, I’d say. John Chambers too is a shrewd businessman and I’m sure he’s working on something. Do not forget firms like Nortel had a market cap of nearly $400 Billion in 2000 to a mere $2 Billion by 2002, sure there were controversies involved there but the state of the markets is rather volatile. I foresee very severe, contractionary conditions, there will be market compression in many sectors. Q4 2009 will be a very different story. Should effective M&A would have taken place by 2009, the markets will open up for opportunities in 2010 BUT should firms keep on waiting, they might have to pay dearly for it.
Larry has taken out some of the most visible databases and could convert the mySQL into Oracle offerings and thus gaining 80% of the market where a new eco-system is building. And eventually the java and sql stack will power up the Cloud like never before. Traditional software will still sell and higher margins are still achievable while the hardware will almost sell for free. Almost.
VMware would lose its luster as Microsoft gets stronger by Q2 2010
VMware’s software may not be as lucrative as Microsoft comes out with its Server 2008 R2 and eventually with its own Cloud OS Midori and all the live-migration and all the power management capabilities. They are spending a huge amount of knowledge and cash in the data center build-out and they will finally rout out VMware. Why?
Simply because we all work on Microsoft applications and Microsoft will take the ownership of their software back to their own data centers. SQL Services, Exchange Services, Sharepoint Services, … all that will eventually get sucked in either IntraCloud Azure offerings OR ExtraCloud MSFT’s own data centers. VMware has a great piece of software and when Microsoft’s Azure will start rising and all the moons will start converging, the time would have come. Then you’d have a hard time finding a buyer, not when the new markets would have defined themselves.
Microsoft will also eventually acquire Dell (I expect that to happen by Q1 2010) to make its own HW/SW/SI circle complete.
Microsoft eventually rides out well with its own hypervisor
Because after all the absorptions (M&A) would have taken place, MSFT too will come out of its shell and due to its Software+Services and its own commodity and free hypervisor, it too could have a better 2010-2020 run. Why? Software will reign supreme and they are and have been in the software business. It could run on hardware and OEM’ing that was a hard work already, OEM’ing it on software is just not done.
Larry Ellison knew that and just didn’t budge. Steve Ballmer has done his best, Ray knows better and like I made my prediction, Bill Gates will be back at the helm by 2010 — because he is the only one who knows how to do it!
So the key words here are:
- Software will reign supreme [even when its getting commodized because in its insolidity lies its strength to build stacks above it]
- Proprietary hardware will lose out to commodity substrate of hardware chunks [mass manufacturing will drive prices down dramatically]
- Hypervisors are already a commodity, why pay for proprietery hypervisors
Word of caution: Big Blue is hurt by the Sun swoosh, and it might go after Citrix as well. So, John, you have been warned 
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