"Microsoft can’t be competition for Citrix"

Citrix gets 98 percent of its revenue from the MetaFrame Access Suite on the Windows platform. Not surprisingly then, the company is loyal to Microsoft. Nabeel Youakim, area vice president, Microsoft Global Relationship, Citrix Systems, talks to RAHUL NEEL MANI

* How do you see Citrix’s relationship with Microsoft from the business point of view?

The Citrix-Microsoft relationship is a very important one, and hopefully it is important for the customer too because we carry out mutually-agreed-upon R&D to make business computing easier. It’s been nearly 14 years since Citrix and Microsoft entered a partnership. Their Terminal Services are actually Citrix technology embedded in a Microsoft platform. Citrix has also got a development team in Redmond [Microsoft’s headquarters]. Terminal Services and [our] MetaFrame Presentation Servers are very much correlated. Every time Citrix sells a Presentation Server, it also sells Terminal Services by default.

* How do the two companies benefit from this relationship, and how does the user benefit?

Microsoft has named Citrix its Independent Software Vendor (ISV) of the year. There are a number of reasons for doing so. We generate $250 million worth of revenue for Microsoft every year. If you look at the size of Microsoft and the money floating in the veins of the company, it might be just the tip of the iceberg for them, but to Citrix it matters a lot. Let’s not forget that globally Citrix is a $588 million company. Our platform is mainly Windows, and that’s the value (in terms of revenue) that Microsoft gives back to Citrix.

* In one sense, doesn’t Microsoft’s Terminal Services pose a competition to your Access Suite?

That’s how some people actually perceive it, which Citrix thinks is a sheer misconception. Microsoft is just a platform and can’t be competition for Citrix. Before we convince users to buy MetaFrame, we have to convince them to buy Windows Services and Terminal Services. These are not competition but the platform on which Citrix technology resides, and that’s the incremental revenue we generates for Microsoft. Microsoft doesn’t see us as competition because they are extending Windows’ reach to more locations and providing access anywhere, anytime, on any device.

* Microsoft sees Linux as a potential threat. Do you think Linux is a threat or an opportunity for Citrix?

Both. Citrix today doesn’t have a Linux version of MetaFrame. We offer Unix, AIX and Solaris versions. The company doesn’t see a demand for Linux applications today. None of our customers have demanded a Linux version of MetaFrame. Users have majority of their apps on Windows. 98 percent of our revenue comes from Windows-based platforms; Unix accounts just 2 percent.

* But what about the growing popularity of Linux? Don’t you think that market deserves to be addressed?

The popularity of Linux is on servers for apps like Web services and demilitarised zones where Citrix has little stake. Linux is growing popular on the desktop now. For that, Citrix offers a Linux client through which you can access all the Windows applications from a Linux-based desktop. It is as good as our Unix, Mac and other such clients. If Linux becomes the platform of choice and the masses adopt it, the company will not leave that opportunity for competitors to grab.

* But will Microsoft be an obstacle?

Why would Microsoft come between Citrix and the Linux opportunity? We are platform-independent access service providers. We have a Unix version of MetaFrame…does Microsoft come between us and that initiative? As of now there isn’t enough momentum in favour of Linux so we don’t feel the need to have a Linux version.

* How important will this relationship remain in future, specially in terms of generating revenue for Microsoft?

It won’t be an exaggeration to call ourselves the biggest ISV of Microsoft today. As we move forward, and as long as Windows apps retain their dominance, Citrix will be very relevant for Microsoft. We don’t rule out a situation where we shift to another application set and platform, but as of now neither Citrix nor Microsoft thinks of any adverse proposition like this. Citrix strongly believes that Microsoft platforms and .Net environments will remain hot for times to come.

* Is it also true that the fate of Citrix depends on Microsoft’s business?

I don’t think we are completely dependent on Microsoft. We are into the access business and it is not necessary for us to follow the product trail of Microsoft. Citrix uses the Windows platform to deliver the access strategy for its users. An access strategy is all about complexity at the back-end. It can be on any architecture—Unix, Mainframe, Windows, anything.

* Couldn’t Microsoft pave over Citrix anytime it wants with over $30 billion in cash?

Citrix generates nearly $600 million from its business. As I stated earlier, 98 percent of our revenue comes from Citrix’s access technologies deployed on Microsoft platforms. We spend around $450 million across the businesses in Citrix on R&D and developers. Why would Microsoft want to take Citrix out of the picture? Will they get more revenue by acquiring Citrix? They are already getting over $250 million for their Terminal Services from Citrix. Why would Microsoft invest $450 million to get revenue of $250 million? There is no incentive for them to acquire us. But if at all Microsoft buys Citrix we have serious doubts if it will be able to generate such amounts for itself.