Tarantella CEO: Citrix War Is Over

Since taking over as CEO of Tarantella almost a year ago, Frank Wilde has revamped the company's channel and signed an alliance with IBM to complement its existing relationship with Sun Microsystems. As a provider of terminal services on top of Unix/Linux servers, Tarantella has existed in the shadow of Citrix Systems for a number of years. In an interview with CRN Editor in Chief Michael Vizard, Wilde, who prior to joining Tarantella held executive posts at IBM and Dell, explains why Tarantella needed to overhaul its channel and how the company is taking a more conciliatory approach to Citrix.

CRN: Under your tenure, how has Tarantella evolved?

WILDE: Before I joined the company last December, I'd never seen a company where the customers loved the product so much and the company's financials were so poor. As we analyzed the company, we realized that the company attempted to sell Tarantella through a channel but they used to sell the SCO operating system server. All these guys that used to sell operating systems were not familiar with infrastructure. The real money in this business is in large enterprise projects where the big hardware implementations are changing to implement security and manage desktop applications. Looking at that, we started a program to work through our channel partners and basically rotate the channel partners. And, basically, because we're focused on large hardware installations, we forged a much deeper relationship with Sun and then we created a relationship with IBM. As a result of those two efforts, on July 1 we split our selling organization into two groups. One is focused on Sun and one is focused on IBM and we work very closely with those guys and their reselling partners.

CRN: What does the Tarantella channel look like today?

WILDE: We have about 30 people or so working our channel--half of them are in Europe and the other half are in the U.S., and then we have some folks that [are in] Asia-Pacific. We put a focus this year on the U.S. and Europe because 50 percent of our revenues come from Europe, about 40 percent of our revenues come from the U.S. and then 10 percent from Asia-Pacific. We've kept some of the old partners and brought in some new ones, but we've got a mix of partners that we believe are very effective in the industry we're in today. Our folks [have] a real tight focus on getting customers ramped up because sales cycles are five to six months, so we've got to make sure we've got plenty of business in the pipeline and [are] not just out signing up partners to sign up partners so we can kick off a number. We've got to be able to have the partners be able to really generate revenue.

CRN: How big a channel will you ultimately need?

WILDE: I'd like to say we'll be able to build a company that has $100 million or $150 million in revenue. And we know that the customer will spend about $135,000 on their first project. So given that, if we want to build the company to $50 million to $100 million, we need somewhere in the neighborhood of 500 to 600 solution providers to be able to build this company.

CRN: How financially stable is Tarantella today?

WILDE: We've taken all of the steps to clean up the company. We've cut our burn rate. We've got a pristine company with a good solid balance sheet and a great opportunity to be able to grow this year to get the profitability.

CRN: What differentiates your approach to terminal services?

WILDE: We're a Linux/Solaris-centric solution. People say we're Citrix for Linux. That's one way to look at it, but customers don't see Citrix and Tarantella competing for a couple of reasons. When you look at the capability that we deliver to a customer, it's very complementary to what Citrix does. Citigroup is a huge Citrix company and a huge Tarantella installation. What Tarantella does is allow us to take Unix applications and deliver that to any user while they use Citrix to be able to deliver Web-based applications to any user.

CRN: So the battle with Citrix is over?

WILDE: I think that was yesterday's war. We didn't get into this business to go beat the crap out of Citrix. We got into this business to be able to get a return for our shareholders. They've got great products. They do a really good job in the Microsoft environment. If you want to run on Microsoft, that's a great solution. But we have a different approach. Our approach is if you run on Linux, then you don't need anything else.

CRN: But some organizations may opt to standardize on just Tarantella to deliver both Unix/Linux applications and Windows applications?

WILDE: A lot of people do. People do that because it's lower cost, it's easier to implement and it runs on Linux as opposed to running on Microsoft. People have decided to go to Linux but they still want their Windows applications delivered to their users. And many of those users are kicking and screaming that they don't want to give up their Microsoft PCs because they want the Office productivity applications. So you can drop us into that environment, support Microsoft in a server-based computing environment and you get the best of both worlds in a way that's very inexpensive. It's an enterprise-class Linux solution.

CRN: How do you manage pricing across a server-based deployment model?

WILDE: One of the big projects we did when I got to the company [is] I read the price book and said I couldn't understand it. What we've done is simplified it to the nth degree. If you're an IBM sales guy, all you have to do is figure out how many users the customer wants, figure out how many servers you need to support those users, and we sell the software. We look to the sizing for different kinds of servers. We've priced the software $30,000 for a one-CPU, $60,000 for a two- and $90,000 for a four-processor server. We deliver the whole product together on the server for X price.

CRN: Why is thin-client computing becoming popular again?

WILDE: There are two ways to look at the client. One is the total cost of ownership and the other is from a support standpoint. And we have customers that are kind of like in both camps. People want a client be as thin as possible because of viruses, support costs and managing the software on those clients. Those are big costs to large organizations. Then we have people that don't care what the client is. They have people that live all around the world and they have all kinds of different clients. Their attitude is give the user whatever he wants, but we want to make sure that whatever they're doing gets preserved at the server so you can get better maintenance and security of your source code.

CRN: Does that approach add an additional layer of security by putting Linux servers at the edge of the network and then delivering Windows applications over Tarantella?

WILDE: The architecture that we operate in is three-tier where we use one protocol to communicate to the browsers and a native protocol to communicate to the applications. So it adds an additional level of security. If this protocol to the device was ever hacked you'd never get through to the application. So we have a stopgap measure that provides great security.

CRN: So are customers beginning to segregate their Windows servers from the edge of the network so their applications are less likely to be attacked?

WILDE: We've got a number of different organizations that are so concerned that the only thing they want outside the data center is Tarantella.

CRN: Do you think that terminal services software is becoming part of a larger category of access management tools?

WILDE: This does definitely become a subset of a larger category. We're a great partner because this product is a component of a solution. It's not the whole solution. We've looked at our strategy going forward. Should we go out and buy other companies? Should we get acquired? There are a lot of very interesting companies today that you could acquire, merge with or ramp up with. But for right now we have a commitment to our investors that says you've got to get to profitability. And the way you get to profitability in all the companies that I've ever been part of is focus. So we're going to do that first before we get our eyes bigger than our stomachs.