Open Source Blog

"Should open source vendor executives be salivating at the future prospects, based on this multiple? No. I think that it’s clear that the multiple is tied to XenSource’s product focus, virtualization, and not to the fact that Xen is released under an open source license (nor its existing customer base)," adds Zachary.

Yes, the open source Xen project is at the heart of XenSource's business (or the "engine" as XenSource CEO, Peter Levine described it on yesterday's investor call), but Citrix did not pay $500m for the Xen project.

As Savio Rodrigues notes if Citrix was after Xen it could have got its hands on it for a lot less than $500m:

"Correct me if I'm wrong but wouldn't it take a lot less than $500M to develop competing technology to Xen. Alternatively, it's open source, so Citrix could have forked Xen and had the technology for next to free. However, building a competitive offering or forking Xen would not deliver the user base of Xen, the linkage with RHEL/SUSE or the Linux kernel in the future."

In fact, as noted yesterday, the deal sees XenSource distancing itself from Xen in the longterm, as well as Linux. "While the engine is open source, the car is the value-add that customers need," said Levine, referring to XenSource's value-add virtualization services and management capabilities, which are not open source.

This is what Citrix is paying for. That and a close relationship with Microsoft that looks likely to get closer. “We will be building dynamic virtualization services and management tools on top of Viridian,” Levine added. “We will build the same set of products we’ve built on top of Xen for Viridian. We’ve already hired a team to go do that up in Redmond.”

While Citrix maintained it will continue support for the Xen project, this deal is not about a proprietary vendor getting open source religion. It's about grabbing an emerging player in a rapidly expanding sector of the market.

The fact that Xen is an open source project is incidental.