Citrix’s New Direction: Follow the Apps

By Charles King, Pund-IT, Inc.  March 16, 2016

Directional course changes are never easy, sometimes impossible and occasionally disastrous. Just ask the captain of the Titanic. But the same thing applies to businesses that face adapting to fundamental changes in their target markets. Public perceptions often complicate the process, too. If a company is a well-known purveyor of certain kinds of products and services, it can run into resistance or even opposition if it attempts to branch into other solutions.

The best vendors are those that recognize significant threats, manage the impact and continue to provide service to their existing customers while exploring new opportunities. Citrix is an interesting example of this kind of vendor.

Background & challenges

Citrix was launched in 1989 and initially focused its efforts on Multiuser, a solution that allowed five PC users to access server-based software. In 1995, the company launched WinFrame, which supported up to fifteen workers and was the first thin client for the Windows OS. It grew rapidly, boasting over 15M users by 1999 but suffered (as did most IT vendors) after the bust and fallout.

Citrix solutions were synonymous with Microsoft Windows, but in the early 2000s, the company began expanding via strategic acquisitions. In 2003, it purchased ExpertCity whose “GoTo” applications led to Citrix’s introduction of GoToMeeting in 2005. The purchase of XenSource in 2007 enabled Citrix desktop and server virtualization solutions. Over a dozen deals in the following years opened the door for the company to develop/deliver SaaS, IaaS, cloud, virtual desktop infrastructure (VDI) and mobile offerings.

But Citrix also faced significant challenges, particularly during the past half-decade. Like other vendors strongly associated with the Windows ecosystem, the company was hurt when PC sales slowed, and it should have moved more quickly to develop mobile solutions and services. During this time, it also faced increasing competition from VMware which was pressing forward in VDI market opportunities. Finally, there were instances when Citrix was impacted by Microsoft’s efforts to cloud-enable applications, including its Office suite.

Citrix suffered a decline of more than 25% in net income between 2013 and 2014. The following year, the company announced changes to its board of directors, and longtime CEO Mark Templeton retired. Shortly afterward, Citrix announced plans to spinoff or sell its GoToMeeting assets. In January 2016, Kirill Tatarinov, a senior executive in Microsoft’s Business Solutions group, was named Citrix’s president and CEO and joined the company’s board.

Follow the apps

In a recent briefing, Citrix executives noted that the way forward relies on leveraging its traditional strengths to pursue and capture new business opportunities. The company’s primary focus has always been, “the secure, reliable provisioning of applications and data to any device, anywhere, anytime.” There’s no shortage of competitors in those discrete areas, but what Citrix offers that many others do not is, “a unified codebase and management platform that works across on-premises, mobile and cloud environments.”

That’s an attractive proposition for enterprises that continue to struggle with supporting platform-agnostic employees and executives. Most of them commonly utilize Windows-, Android-, iOS- and/or Chrome-based devices interchangeably, and expect to have the full support from organizational IT regardless of their locations or circumstances. With that in mind, Citrix’s strategic initiatives for 2016, including enhancing user experience, security and flexibility, should all resonate with current and prospective customers.

So should the company’s intention to “Follow the apps,” including supplying support for all major multiple operating systems, app environments and markets. That’s particularly important for cloud and related environments since, as the company’s representatives pointed out, browser-based solutions now make up more than half of all business applications. But it also resonates with Citrix itself, given the critical position that application virtualization has long occupied in the company portfolio.

Two to watch

As Tatarinov and his team lead Citrix forward, they will be paying close attention to two companies that have been critical – though in very different ways – to the company’s fortunes and worldview: VMware and Microsoft. In the former case, Citrix’s intention is to press hard by leading with some of its strongest solutions, including deep integration with Skype (the #3 PBX platform in the U.S.), extensive collaboration (since 2010) with Google on Chrome and solid support for multi-OS business environments, particularly Linux which is used by 80% of Citrix’s customers.

In the latter case, Microsoft has been a critical Citrix partner for over 20 years (a point underscored by Tatarinov’s appointment) and the company sees many opportunities for co-promotion. Those include an acceleration of Windows 10 adoption among business customers (which is also being emphasized by the company’s PC/laptop/thin client vendor partners). Citrix also believes that the upcoming launch of Windows Server 2016 will result in a significant number of upgrades among its customers.

Final analysis

As noted at the beginning of this commentary, changing course is never easy for businesses. Over the past half-decade, it’s difficult to think of a sector that has faced more fundamental disruption than personal computing. One key to surviving and thriving in such circumstances is to keep that disruption from leading you to forget the characteristics, customers and partners that helped drive past success.

In very real ways, Citrix’s new leadership will have plenty of opportunities to discover whether its new “Follow the apps” strategy and attendant efforts resonate in a rapidly changing market. But just as importantly, the company appears more strongly and realistically positioned than it has been in several years. Now it’s time to see what customers think, and whether Citrix’s new aims and attributes can translate into new opportunities.

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