What's Citrix' Secret?

What's Citrix' Secret?: As Microsoft continues tightening the coils around its so-called partners, one somehow manages to continue to thrive. How does it do it?
TAPping In: The elite beta-testing programs for Longhorn and Commerce Server 2006 are gearing up - as are the Microsoft bloggers responsible for the various Technology Adoption Programs inside the company.
Microsoft Sharpens Its SMB Aim: Microsoft is fleshing out its strategy to attract and keep more SMB customers.

What's Citrix' Secret?

It's a never-ending cycle. Microsoft partners with software and services vendors to round out its family of offerings. At some point, the Redmondians decide a given market is too lucrative to let slip by. Microsoft ends up fielding its own products that compete directly with offerings from their partners. The result? The partners typically decide to 1. sue Microsoft, hoping to recoup some of their lost revenues; 2. diversify and port their wares to Unix/Linux/the Mac; 3. move into entirely new markets; and/or 4. do all of the above.

Last week, it looked as if the cycle was destined to repeat itself. Microsoft announced a first beta of its Windows AntiSpyware tool, as well as its intent to debut an anti-virus removal tool aimed squarely at a number of its security software "partners." Microsoft's announcements led to a plunge in Symantec's and McAfee's stock prices, and much speculation on how and if these and other Microsoft security "partners" will weather Microsoft's entry into the market.

Symantec, McAfee Stocks Plunge on Microsoft Security News

Is there a way companies can avoid the dancing elephant (a k a the Redmond beast)? Or is the risk of being trampled at any time just a fact of life for vendors scratching out a living in the Microsoft ecosystem?

We decided to ask these questions of one of the few Microsoft independent-software-vendor (ISV) partners that somehow has managed to avoid being flattened: Citrix Systems.

One could argue that Citrix is too small for Microsoft to care about. But Citrix has had a couple of close calls, as Microsoft watchers may recall. Microsoft's moves in the terminal-server area have resulted in Citrix' stock taking a nose dive more than once. And terminal services is becoming a hot button for Microsoft. Normally, that would spell doom for its 'partner' in the area.

But in December, Citrix renewed its partnership with Microsoft for another five years, giving Citrix access to the Windows Server source code and cementing a cross-patent licensing agreement between the two. In January, Citrix' stock price belatedly rose as a result of the agreement.

A Citrix-Microsoft History Lesson

December 2004: Citrix, Microsoft to Share Patents, Source Code

And for Ongoing Citrix Coverage, Check Out Consultant Brian Madden

It takes more than licensing deals to keep on Redmond's good side, however, as Nabeel Youakim, the Citrix vice president in charge of the Microsoft global relationship, told Microsoft Watch.

So what's the secret to Citrix' success? Youakim chalks it up to relationships; a little bit of luck; and the ability to read a market and an industry.

He also, not surprisingly, dismissed as conspiracy theories talk that Microsoft has allowed Citrix to stay alive (with cash infusions, technology partnerships and the like) simply to prove that the Redmond giant doesn't kill off ALL of its partners.

Youakim came to Citrix with a useful pedigree: He had worked for Microsoft Australia for six years, prior to joining Citrix. "I was at Microsoft in 1997, when the original Citrix deal was done," he says.

Youakim understood from the get-go that in order to partner with Microsoft, you need to talk and think like the 'Softies.

"We address Microsoft's priorities very well," Youakim explains. "We see their plans and see the complexities and interoperabilities they need to deal with."

While Citrix offers more than just Windows versions of its products, "our most robust versions run on XP. So Microsoft sees we are very pro-desktop," he says.

"Microsoft's biggest problem is they have lots of users who've bought Microsoft Office, but aren't deploying it. We told them we could get it deployed over a weeked for many hundreds of users from a server," Youakim says. And that was music to Microsoft's ears.

Incremental sales contributed by Citrix are equally melodious, Youakim claims. Citrix officials are fond of noting that Citrix is driving $300 million worth of revenues to Microsoft annually. Because Citrix' MetaFrame Presentation Server is sold on top of Microsoft's Windows Server and Terminal Server products, "every MetaFrame sale is a Terminal Server and Windows Server (CAL) Client Access License sale for Microsoft," Youakim explains.

"I don't believe there's any other Microsoft partner who can make that ($300 million) claim and generate that amount of revenue with so little effort required by Microsoft," he says.

Citrix also studies Microsoft's Go To Market marketing campaigns and seeks ways it can fit into the themes of the month, ranging from NT 4.0 migration, to "Linux Compete," Youakim says. In the case of NT 4.0 migration, Citrix staff conducted seminars with Microsoft's sales force, he says.

Citrix also has worked to educate Microsoft's sales force on an individual basis about "where we add value," Youakim says. When customers ask 'Can we use Citrix without Microsoft?' or 'Can we do Microsoft without Citrix?' Youakim wants the Microsoft field sales folk to know the correct response (which, in case you hadn't guessed, is "NO!").

Citrix developed a training program for its own people "on how we think about Microsoft," Youakim says. "We need to be able to translate that relationship to the (Microsoft) field," he says. Citrix is especially interested in educating and influencing Microsoft Partner Account Managers (PAMs), he says.

Citrix will have a chance to get inside the Microsoft machine even more in the coming months/years. The Microsoft partner has had its own Redmond office for a while now. But under the terms of the new five-year agreement, Citrix also will have a development/engineering office right on the Microsoft campus, as do a number of Microsoft's closest software and hardware partners. Going forward, Citrix is looking to collaborate with Microsoft in new areas beyond terminal services, he says, including SharePoint, Virtual Server - and, of course, Longhorn.

The bottom line in dealing with Microsoft is to remember it's all about money, Youakim concludes.

Microsoft is no push-over. "We are very demanding with each other," Youakim says. "They are tough (to deal with) because they are so big. Even some of their own groups don't always talk to each other." And while competition isn't Microsoft's only thing they do well, "it's definitely their strong suit," he jokes.

In the end, vendors have to make a decision: Do you want to be one of Microsoft's partners or one of its competitors, Youakim says. In Citrix' choice the answer is crystal clear.

"Our partnership is all about money," he says. "We have shareholders and they have shareholders. And hopefully, we are both making them happy."

We'll see in five years if Citrix shareholders still feel the joy.

TAPping In

We haven't heard much about Microsoft's Technology Adoption Program (TAP), its uber-beta-testing program, since we first wrote about it in the February 19, 2004, issue of Microsoft Watch.

Read This Recap of Our TAP Coverage for a Refresher

But in the past couple of weeks, the Microsoft TAP teams have gone on the public-relations (PR) offensive.

TAP is the synthesis of a number of former Microsoft elite-tester programs, including the Joint Development Program (JDP), Early Adopter Program (EAP) and Rapid Deployment Program (RDP). Under the unified TAP, there are four different TAP testing subgroups: product validation, product evaluation, rapid deployment and solutions implementation. Once a customer is accepted into TAP for one Microsoft product, it sounds as if it's almost a given that s/he will become a TAPper for others.

A Definition of TAP from the Windows Customer Connection Team Blog

Microsoft is about to begin recruiting Longhorn TAPpers, according to TAP program manager Peter Schenk, who blogged about Microsoft's intentions last week.

Schenk says Microsoft is working actively to expand TAP beyond North America, to include more testers in Japan, Hong Kong and India.

Read Schenk's Blog Entry on TAPping for Longhorn Testers

Microsoft's not only prepping for its Longhorn TAP, but for Commerce Server 2006, as well.

Ryan Donovan, a group program manager for Commerce Server 2006, blogged last week that his team is seeking nominations for TAPpers for the next version of commerce server between now and the end of January.

Donovan: Commerce Server TAPpers, We Want You

Microsoft Sharpens Its SMB Aim

At the same time as it is looking to its enterprise customer base to fill out its Technology Adoption Program (TAP) ranks (see story above), Microsoft isn't forgetting about the little guys.

In fact, small/mid-size business (SMB) customers are among those the Redmondians are recruiting for TAP, too.

And there's plenty of other small-biz evangelism programs in the works at Microsoft. (We last reported on some of it in the July 22, 2004, issue of the Watch, when we covered the activities of Microsoft's Small and Midmarket Solutions and Partners, or SMS&P, unit.)

From 2003: Microsoft Sets Its SMB Priorities

Now, other parts of the company are getting involved, as well.

Example: Microsoft's Enterprise Engineering Center (EEC) will be hosting an event at the end of January with 50 SMB customers to help Microsoft discover and document current SMB pain points and future product needs.

"Generally the EEC focus has been on the Enterprise so we are very excited to be involved with this new market segment. The Small Business has a whole different set of needs and wants from our products that this event will research and document," said a Microsoft EEC blogger (whose posting has since been removed, we notice).

In early March, there will likely be more SMB noise, when the "SMB Nation" show hits Seattle. The event, aimed at ISVs, will instruct participants "how to profitably position your software in the elusive SMB arena, avoid pitfalls and team with HP and Microsoft."

Check Out the SMB Nation Agenda Here

Last, but not least, we hear there's a new small-biz marketing team in Redmond town, known as the "Windows XP Pro Small Business Marketing Team." This group is charged with helping to position Windows XP Professional, XP Home and the Tablet PC for retailers and system builders, who are the primary distribution outlets for SMBs.

Microsoft's evolving SMB efforts should be a hot story throughout 2005. Watch for more coverage throughout the New Year.

Microsoft Watch Information

Copyright 2005 Ziff Davis Media Inc. All Rights Reserved. Ziff Davis Media Inc., 28 East 28th Street, New York, NY 10016. The Microsoft Watch newsletter and Code Name Tracker are intended for the individual use of the recipient only, unless licensed. Reproduction in whole or in part without permission is prohibited. Microsoft Watch is an independent publication, not affiliated with or authorized by Microsoft Corporation.

Posted by Mary Jo Foley on January 10, 2005 12:29 PM

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