When Citrix announced its acquisition of XenSource in August 2007, 451 CAOS Theory argued that the huge multiple being paid had little or nothing to do with open source. “While this is exciting news for the XenSource founders, I don’t think the open source vendor community should get caught up in this excitement. It wasn’t open source that provided the 150x multiplier,” wrote Raven.

This was before my arrival at The 451 Group, but by happy coincidence I agreed with Raven’s position on this. “The deal sees XenSource distancing itself from Xen in the longterm, as well as Linux,” I wrote at the time. “‘While the engine is open source, the car is the value-add that customers need,’ said [then XenSource CEO, Peter] 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.”

Six months on and Paula Rooney has an interesting update on Citrix’s XenSource strategy that indicates perhaps we weren’t following flawed reasoning after all. “Citrix officials have indicated that they will use the hot XenSource branding, but de-emphasize its identity as a virtualization company. Citrix’s flasgship Presentation Server has been renamed to XenApp Server, a fitting title considering its function as an application delivery platform. But it has no XenSource code,” she writes.

“While Citrix is using the Xen name for its individual products, it is positioning the entire stack — including its NetScaler web accleration platform — as the Citrix Delivery Center. From that, it appears that Citrix is diluting XenSource’s core identity as a virtualization company in order to score points with Microsoft and catapult Microsoft’s forthcoming HyperV hypervisor as VMware’s chief rival.”

I noted at the time of the announcement that Citrix planned to focus its attention not on the open source Xen project, but building closed source virtualization management capabilities for both Xen and Microsoft’s Hyper-V (then known as Viridian). “’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.’”

Then again I also predicted that Citrix would spin off Xen as an independent project, and there’s no sign of that just yet.