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With Rackspace Buy, Citrix Can Lead the Cloud Conversation

I have, on several occasions advocated that Citrix should buy Rackspace, most recently here in my InformationWeek blog and some time before that, I suggested that Cisco should buy both Citrix and Rackspace here in my Virtual Insider blog.

I still stand by my recommendation that if Cisco really wants to have a chance in hell of "crushing" VMware (John Chambers' words, not mine) in the software-defined networking space, it will need a hypervisor, and unless it plans to acquire Red Hat or Oracle, it's only other choice is Citrix. (I'll let that topic marinate for a while and talk about it some other time when we can expand on it a bit.)

When I wrote my columns on Citrix or Cisco acquiring Rackspace, I based my opinions on my knowledge of things that you can observe from outside of Rackspace, things like stock price dropping, CEO vacancy, a sales force incapable of selling to the enterprise, and so on. This past Friday, Rackspace pretty much put itself up for sale by hiring Morgan Stanley to broker a deal with a potential suitor.

I still maintain that it would be a strategic "miss" on Citrix's part to not step in and acquire Rackspace. Citrix cannot allow itself to become middleware, it just cannot be satisfied with that position. The acquisition of Rackspace would shoot Citrix to the forefront of the cloud conversation in the public eye and get the attention of enterprises, especially what with all the buzz going on around OpenStack.

Rackspace is the perfect size. It's not too big, not too small, and can be easily digested by Citrix and groomed for growth. Citrix can bring a lot of goodness to Rackspace, especially from a sales perspective and how to sell in the enterprise. Citrix has an army of account reps that focus entirely on the enterprise. Meanwhile, Rackspace has an inside sales army that develops leads, for the most part.

In addition to the sales force component, Citrix can also augment Rackspace from a large partner community perspective and also from a consulting services and expertise perspective. In many ways, it can help RAX build the intellectual property needed to support enterprises moving to the cloud, not to forget that Citrix can also bring education and training capabilities for partners and IT professionals.

Rackspace, on the other hand, puts Citrix front and center into the cloud conversation. Citrix/Rackspace would be to Microsoft Azure what Citrix XenApp was to Microsoft Terminal Server. Think about it: Microsoft Azure is a very generalized cloud infrastructure. Rackspace is all but generalized -- its claim to fame is "fanatical" support, in addition to value-added services that one cannot obtain from the likes of Azure, AWS, IBM or others. Is that not what Citrix has always done -- add value, features and capabilities on top of a platform? Why can't that platform be the cloud?

Citrix must not sit this one out and be on the side lines enabling partners or take the approach that it is just middleware to everyone else. The cloud is too big to sit out and it is not enough to have enterprise software for on-premises or for other cloud service providers to use. Citrix needs to enter this game and Rackspace gives it that opportunity.

Missing out on Rackspace would be a mistake, as Citrix won't come across another CSP with such strong brand recognition, the right size and poised for growth with the right suitor. And Rackspace owns one of the most talked about cloud management stacks in the industry today.

Citrix can also then offer Workspace Services on Azure or its own cloud, just like it has XenServer and it supports Hyper-V and vSphere.

If not Citrix, Cisco would do wonders with Rackspace in a short period of time. Cisco announced its Intercloud intentions and I expect that we will hear a lot more about this during the upcoming Cisco Live event in June.

Speaking of Cisco Live, what a great time and venue to announce the Rackspace acquisition. Cisco can bring to Rackspace all the benefits and goodness that I mentioned that Citrix can bring, and then some. The only reason I like pairing Citrix with Rackspace as opposed to with Cisco is that in the latter RAX would quickly melt in the Cisco engine. Of course, Rackspace would be a strategic project for Cisco, but with Citrix, Rackspace would elevate the companies to a different level.

I have always maintained that cloud is first and foremost about scale, and that's why there's a definite advantage to Cisco acquiring RAX, as it has the ability to rapidly and "fanatically" expand RAX to Amazon- and Azure-scale levels. Cisco definitely has the means and capabilities to do that.

Let's not dismiss other potential suitors for RAX. VMware which could use Rackspace to enforce vCHS. I'd be less excited to see EMC buy it just because I think the synergies would be missing. And if IBM acquired Rackspace it would be to add more capacity and to get OpenStack, which is not exciting or interesting and I don't see IBM being motivated to create something new or different. The same applies to HP, Dell, Verizon, ATT and a whole slew of potentials. I just don't see them being successful.

I truly hope Citrix steps in and picks up Rackspace, as customers would be the ultimate winners.

Posted by Elias Khnaser on 05/22/2014 at 7:00 PM


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