The Citrix Systems-XenSource acquisition has brought disappointment and frustration to some Citrix partners, who said the vendor isn’t being aggressive enough with its server virtualization strategy.

- Via Search Systems Channel

Somehow I told you so just doesn’t cut it. This is the first time I’ve seen some good public documentation backing up my confusion around what the heck is going on with the Citrix acquisition of XenSource. They certainly aren’t making money on this deal. Why they’re not being aggressive with the technology is anyone’s guess.

Brief and to the point.

VMware announces a stellar 42% year over year growth in revenue. Everyone keeps their jobs.

Microsoft announces a flat 2% year over year growth in revenue. 5,000 people lose their jobs.

Citrix announces a marginal 4% year over year growth in revenue. 10% of the company loses their jobs.

Enough said.

Last week Citrix released their earnings for Q3 2008. XenDesktop and XenServer combined to give them $7 million for the quarter. This brought back my initial thoughts of why the purchase of XenSource late last year even makes business sense. I’m not talking technology here since they have a fine product – I’m talking about the business numbers. Personally if I go out and spend $500 million on a company I want to make that money back in at least 3 years so I can start adding to my coffers after that.

To date Citrix has made $14 million off XenServer and XenDesktop ($3 MM in Q1; $4 MM in Q2; $7 MM in Q3). At this run rate they will make their $500 MM back sometime in 2020 (assumes $10 MM per quarter). Here I thought Microsoft would be late to the game with a target of releasing yesterday’s technology in 2010. Citrix may be closer with the technology side but I’m fearful they won’t be around long enough to do anything with it.

When I originally wrote about this in February Simon Crosby (CTO of Citrix) accused me of trying to prove that I passed high school math. Well, Simon, I passed high school math. I was actually the captain of the high school math team and had 4 years of calculus in college. With all of that I still can’t make business sense on this acquisition and the payback to Citrix.

Later in the year I wrote about the impact for Citrix partners vs VMware partners when looking at revenue opportunities. With $7 MM in Citrix revenue for Q3 versus $473 MM for VMware in the same quarter, if you’re a virtualization partner which slice of pie would you rather be fighting for?

So if there’s anyone out there that can explain the business sense (not the technical sense) of how this was a good thing then please feel free to comment away. If anything else we’ll at least have an interesting conversation.