Microsoft, Citrix Renew Vows For Longhorn Server Era

Microsoft and Citrix Systems embraced the holiday spirit by announcing a five-year extension on their longstanding technology-sharing pact for terminal services.

On Tuesday, the two software allies announced an expansion of their technology marriage, which they signed in 2002. The expansion calls for broad patent cross-licensing of their respective terminal service technologies and a technology collaboration agreement to extend the Windows Terminal Server technology in the Windows Server due in 2007, code-named Longhorn.

The new deal also provides Citrix with formal access to the Windows Server source code through the next five years, which will enable the Fort Lauderdale, Fla.-based ISV to optimize and closely integrate its Metaframe access infrastructure products with Longhorn.

Citrix also pledged to have Metaframe updates ready for Windows Server 2003 Service Pack 1 and the Windows Server 2003 R2 upgrade, both due in 2005. Citrix plans to release an upgrade of Metaframe, version 4.0, next year.

The two have worked closely since 1997, when Microsoft first licensed terminal services technology from Citrix for its NT Server. The current agreement in place is set to expire in May 2005.Microsoft announced last week plans for releasing the beta-test version of the Longhorn server during the second half of 2005. As part of that recent announcement, Microsoft said it would incorporate enhanced terminal server management and usability features in the Longhorn Windows server.

But the renewed vows between Citrix and Microsoft should put to rest any speculation that the software companies are growing apart or that Microsoft's next-generation Bearpaw terminal services technology in the Longhorn server would cut Metaframe out of the selling equation, said Ross Brown, vice president of worldwide channels and operations at Citrix.

"Today is an affirmation that our relationship with Microsoft is the closest it has ever been," Brown said. "Partners can invest in both Microsoft and Citrix business together because it's a joint solution and they don't have to worry about one vendor cannibalizing another. What a VAR likes more than anything else is predictable return and profitability, so this sends a clear message that we will be closely linked [to Microsoft] for the next five years."

He said Microsoft will not compete with Citrix's application publishing technology in either R2 or Longhorn. "They stopped talking about Bearpaw and now they're talking about a set of design specs [for Longhorn] and no commitment to any feature set," said Brown.

Brown said the patent cross-licensing provision announced on Tuesday will enable the companies to innovate more aggressively. "We'll have the freedom to develop products in conjunction with each other without stepping on each others' toes," he said. "Microsoft has been doing this with a number of ISVs. We can work closer together so not every development has to involve lawyers."Microsoft last year named Citrix its ISV of the year. Citrix said it expects to contribute roughly $300 million to Microsoft's revenues in fiscal year 2005.

Sources said concerns about Microsoft's Bearpaw terminal services technology died down after the two pledged to remain faithful. Citrix, for instance, has pledged not to release a Linux server version of its popular Metaframe Access Suite, which leverages the terminal services technology embedded in Windows Server 2003.

One top Citrix partner said he wasn't worried about the two splitting up.

"It's not at all a surprise to me, I fully expected it," said Mitch Northcutt, CEO of Rapid App, a Citrix partner in Chicago. "A year ago there was some noise about Microsoft's big push on Bearpaw technology, but six months ago that noise died down. I fully expected they'd end up doing what they're doing now."

Citrix also pledged to update its forthcoming Metaframe 4.0 server and suite to work closely with Microsoft's R2 upgrade of the Windows Server, due for release in the second half of 2005.0