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Citrix Systems has acquired Kaviza. a two-year-old startup with expertise in virtual desktop infrastructure (VDI) virtualization for Windows desktops. Kaviza was founded by some techies out of HP Labs, and Citrix was its Series A venture funding partner.

Financial terms of the acquisition were not disclosed. The deal comes just as Citrix is getting ready to kick off its Synergy 2011 customer event and partner extravaganza in San Francisco this week.

A little more than a year ago, self-funded Kaviza – which sells a package called VDI-in-a-Box that delivers a virtualized desktop for around $600 (including a thin client) – was shopping around for some first round sugar daddy cash, and Citrix snapped up the whole round even though Kaviza had based its VDI implementation of rival VMware's ESXi hypervisor and some clever software kMGR that eliminates the need for a storage area network (SAN) for VDI installations.

With kMGR, all the parts of the VDI software are put into a virtual appliance, including software for storing and replicating PC images back on the servers. Because PC images are stored on the servers, rather than the SAN, a big part of the expense of creating VDI back-ends is eliminated. You can run VDI-in-a-Box on a cluster of x64 servers with normal Ethernet links, no need for expensive SANs and Fibre Channel switches between the servers and storage.

You may think this is not a big deal, but those storage costs, according to Krishna Subramanian, chief operating officer and vice president of marketing at Kaviza, who spoke to El Reg when the Citrix funding came down a year ago, can account for anywhere from 40 to 50 per cent of the total cost for a VDI setup. The Kaviza setup also gets rid of connection brokers, load balancers, and management servers that the typical VDI setup - including Citrix' own XenDesktop and VMware's View - require. These extra pieces of backend hardware are what make a typical VDI installation cost between $1,200 and $2,000 per seat, according to Kaviza's math.

That is what made Kaviza a threat to both Citrix and VMware, and the wonder is why Citrix didn't just by Kaviza outright a year ago. With Kaviza able to get six to eight Windows 7 desktops per processor core on two-socket x64 boxes, the lean-and-mean approach could really start to bite. Now, Citrix can weave kMGR and the local storage option into XenDesktop and create XenDesktop Lite (no doubt spelled incorrectly like that) and have two arrows with which to shoot at VMware.

The VDI-in-a-Box setup and the kMGR software behind it works with any bare-metal hypervisor, and has been certified to run with XenServer from Citrix as well as ESXi from VMware; the company had been planning to support the serving up of desktop images from Microsoft's Hyper-V and that plan is still in the works, according to the acquisition announcement.

Citrix, likewise, supports its own XenServer hypervisor in addition to VMware ESX and Microsoft Hyper-V at the heart of VDI implementations based on XenDesktop, so there will be no change in philosophy here. The goal, no doubt, is to use XenServer, which is free like Hyper-V, more and more, and Citrix has said that given the cost of the commercial-grade ESX hypervisor, this is what more and more customers have been doing.

While the pitch for buying Kaviza is all about how VDI-in-a-Box is aimed at small and medium businesses who are penny pinchers, there are plenty of businesses that would like to cut down on the complexity of their VDI setups and cut the cost of the installation in half while they are at it.

Under the deal with Citrix, all Kaviza employees are moving over to Citrix, and company founder and CEO, Kumar Goswami, is being named vice president of products for a new SMB Solutions unit. Kaviza's reseller channel remains and pricing and packaging of VDI-in-a-Box remains unchanged. Beginning July 1, the Citrix channel will be able to start selling this alternative VDI stack. There are currently no upgrade paths between VDI-in-a-Box and XenDesktop, but there very well could be at some point in the future.

Goswami said in a statement that since releasing its first product in October 2009, the company has grown at double-digit rates each quarter and has several hundred customers worldwide. ®

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