Citrix CEO QandA: Longhorn Challenge, SMB, and Partners

CRN: There is an interim release of Presentation Server planned for the Windows Server 2003 R2 update. And you announced this week a set of technologies code named "Constellation" under development for the Longhorn Server. Yet it wasn't clear how these will be productized. Can you comment?

Templeton: Well, we didn&t want to make product announcement yesterday. "Ohio" is the code name] for the next release of Presentation server. We haven&t made any big secret of that. And it will run on Windows Server 2003 R2.

CRN: And Constellation? Templeton: Constellation is really messaging about technologies that support Longhorn server, our application virtualization strategy and some of those technologies are mostly in form of features and early capabilities that will find their way into Ohio and released before Longhorn because that's two years away. So we're being non specific about product releases.

CRN: Which of the Constellation technologies is the most developed?

Templeton: Iris. We put a tech preview out in July and can download it. We're doing much more around sell, design, build and support, SDBS. Most companies design, build, sell and support. The idea behind the SDBS model is about getting market validation by pouting tech out there early on.

CRN: Like Microsoft is now doing with its technology previews?

Templeton: Yes, so "Iris" can become two or three products. It can record ICA [sessions]and play it back, and there are a bunch of APIs you can leverage, and probably a few areas it has real potential. The first is running system management console on it like HP OpenView, CA Unicenter, or [Microsoft]MOM. Every time there's a change to system configuration you want a record of that and turn camera recorder on, and that may be a product. There could be others coded to certain apps. That&s the furthest along in technology but from a product view we're still in the validation phase.

CRN: What new portal integration points are going to be offered in Presentation Server?

Templeton: There's a Tech Preview for SharePoint. [Finished code announced Oct. 11]. Then there's the new Java portlet standard we're supporting so that WebSphere and other guys that have moved to it can interface with Presentation server very easily. You can download these things today. These aren&t things we sell. For enterprise customers they're components they need.

CRN: At PDC, Microsoft was quite open about its plans to integrate into Longhorn Server significant enhancements to terminal Services including application publishing and seamless Windows, the two most substantial features in Presentation server. Observers have discussed the extent to which this cuts deeply into Citrix's revenues stream. Do you have concerns?

Templeton: We really don&t have concerns. We've always had a partnership with Microsoft that allows us to understand their direction and when it comes to broad horizontal basic services markets, they're great at it. So if I want to be a partner of Microsoft I can't have angst around Microsoft going after these broad horizontal services marketplace. We've been the best software company in the world to work with Microsoft to stack on top of its platform.

CRN: What will Citrix do to stay ahead? We need to understand the customer has deep need for application virtualization and be the vendor that takes the customer up that vertical stack. They can't develop those vertical stacks themselves, for example, usage stacks application virtualization becomes more strategic element to the organization's IT infrastructure. Microsoft is going to deliver great general purpose horizontal OS platform but Citrix builds products that allow them to go deep than what the platform offers.

CRN: But Microsoft's terminal services project for Longhorn Server code-named "RAIL" (remote application integrated locally] targets application publishing and seamless Windows, the cash cows of the Citrix dynasty. In the past they have steered clear of application publishing.

Templeton: Yes, but you have to watch out for what the words [application publishing] are and what the [Microsoft] technology will actually do. Their application publishing will be the result of [Windows Server] Active Directory work and not specific to here's the application publishing feature interface. What you'll see from Citrix is movement to a broader definition of publishing… like publishing a wider array of enterprise resources, under different delivery models. It's one of those things and in this area we're the specialist in and Microsoft arrives on that and if we're not dynamic and keep moving, then we're not doing our part.

CRN: Some predict Longhorn spells the demise of Citrix. Your response to that?

Templeton: [Smiles]. I've been here over 10 years and I've heard that same thing for the last 10 years so it goes in one ear and out the other.

CRN: Did Microsoft share its plans with Citrix during discussions last year that culminated in the five-year extension. Was it all on the table at that point?

Templeton: Well … a platform transition is a big deal. And for both Microsoft and for Citrix, the worst thing Microsoft could do is leave their partners behind when they move a platform, forward. That&s the worst scenarios for them because they rely on partners to add value to their platform. That's what was on the table, making sure Citrix was in good position to make that platform transition in a good orderly way for the benefit of customers.

CRN: Microsoft in the past had a project under development code-named "Bear paw" and now it's RAIL. The pact Microsoft and Citrix signed last December allows for IP exchange. How much of Citrix's technology will be in Longhorn terminal services application publishing?

Templeton: There's nothing public for us to say around that. The primary focus is around source code availability so we could be in lockstep with Microsoft. It leaves a door open to us. We continue to have Citrix developers in Redmond that have a very good relationship with their counterparts at Microsoft and we have people from Citrix at Microsoft coordinating so we get platform [information] on which to build products.

CRN: Is it fair to say it will be big competition between Microsoft and Citrix once Longhorn Server ships?

Templeton: No, I'm not sure what race there would be. Every time they increase those basic services it's an endorsement of application virtualization and increases primary demand and increases the size of the pie, of which we have like 80 percent. Everyone wants to look at the band [of the market] where we used to be but we don&t look at the band where we used to be in but the band that new [Longhorn] opportunity creates.

CRN: Microsoft will go after SMB customers who don't want to pay license fees to both Citrix and Microsoft. So will you position Access Essentials against Microsoft's app publishing?

Templeton: But you can't compare Access Essential to longhorn service. What Access Essentials becomes is an application delivery system for small and medium business and so terminal services is only one [application] delivery service. So again, this is a 'what's best' kind of story and that applies to small customer just as it applies to big customers. Small customers may wants an integrated solution that allows them simply to stream desktop apps, optimize web applications, but in a much simpler type of package. You won't get that in Longhorn.

CRN: What is Citrix's penetration in the enterprise market and

Templeton: From 1,000 employees and up, we think we're relative to the potential at probably 10 to 15 percent into that space so there's still huge opportunity. There are the customers that have client server applications they're only using for remote access and they need to move to all access, even if when at desktop. So it's a huge opportunity left in that space.

CRN: What are your thoughts about pursuing the SMB market? Microsoft will target that market space

Templeton: I think we're getting a start with Access Essentials. It's still really, really early. We like that it is resonating well with certain types of partners that see small and medium companies as their suite spot because customers look to partners as their IT shop and those products makes partners really effective in developing solutions for them since small companies don't have as big a [technology] services budget as enterprise.

CRN: To what extent will Citrix target SMB in the future? How important is SMB?

Templeton: It's very important. It's less than 20 percent of our business historically and that&s without having proactive programs and products and channel recruitment and now we have both and we'll get more momentum.

CRN: We hear the Access Essentials terms are too restrictive for SMB customers. Partners don't like you can't use it over two servers. Any plans to change?

Templeton: We'll definitely listen to feedback. And we're clear we will make changes based on feedback.

CRN: Will that Essentials policy be changed? Templeton: We'll probably not hear it here from partner meeting. It makes sense… [but no decision].

CRN: What can you tell us about Mitch Parker, Citrix's new channel chief? Templeton: Mitch joined us when Citrix acquired Innovex group. He operated as my chief of staff and spent a year doing that and its not designed to be a permanent role. We discussed a broad range of issues and broad strategy across the company. He's a smart guy. We try to take good people and develop them and give them good experiences. He's a had field experience, customers, technical, partners and building consulting organization. He has great deal of experience that positions him well. Innovex was a Microsoft partners so he knew exactly how to work in that ecosystem of constant change.

CRN: What do you have to say about Ross Brown? Were you surprised when Ross brown left Citrix?

Templeton: I absolutely was not surprised because Ross has a lot of personal goals and we've known Ross for along time, as he had his own channel consulting firm and he did a number of projects for us. In July of 2002, I personally hired Ross. his first reporting role was to me. We've always known Ross to be a go getter and we're proud of Ross and what he's done with Citrix and of his going on to something he as passion for.

CRN: Within the last year, Citrix has ramped up its business with large OEMs like IBM, HP and Dell. Can you comment on that?

John Burris: Ross did a lot of work getting some OEM deals. It's systems integration driven in geographical relationships [between Citrix sales and OEMs]

CRN: Templeton: There are two things getting confused here about OEM. We don't have an OEM business. We have OEM relationships on a transactional level. The ownership of those transactions belongs to our products groups so in the case of WatchGuard that transaction is owned by Citrix Gateways Group and that started before [Citrix's] acquisition [of net6]. We made sure to avoid channel confusion, Similarly, on the SI side, Ross did some things working with sales in geographies to make sure we had agreement that makes sense when it comes to not confusing the channel.

Burris: Ross packaged it in a way that make sense to the channel and field. There were concerns about conflict. Ross went a long way to allay concerns about that, quieting that with things like Reward Advantage. Partners realized IBM will add incremental business and reach. It's one of the fastest growing pieces of our enterprise business. We altered our approach to pay attention to larger system integrators in North America and has specific people dedicated to that relationship, HP and IBM, and it's made a lot of difference. The last thing [those OEMs] want to do is cause conflict for us in our ecosystem. They're willing play by the rules.