How Does the Cloud Software Group/Microsoft Agreement Impact ISVs?

The Citrix®/Cloud Software Group/Microsoft® agreement, announced April 4^th, reflects a significant shift in Citrix’ go-to-market and technology strategy. To better understand the shift, and how the new agreement will impact Windows® ISVs using Citrix, let’s start with a brief overview of past agreements between the two companies prior to analyzing the latest iteration of the partnership.

Citrix and Microsoft – the Early Years

The Citrix/Microsoft relationship started in 1989, when Citrix was founded. Microsoft was one of the companies that provided monetary support for the fledgling organization.

At that time, the internet was used by solely by government agencies and educational institutions. Citrix founders were aware of the internet and envisioned a time when it would be widely available. Their goal was to build a product that would enable remote user access to centralized servers from anywhere.

Initially, Citrix licensed Microsoft OS/2 source code to build Citrix’ first product, Citrix Multiuser, released in 1991. Multiuser was an extension of OS/2 that allowed multiple users utilizing non OS/2 computers to remotely access software hosted on a server.

Citrix Multiuser 1.0 was the first iteration of the Independent Computing Architecture (ICA®) protocol, which ultimately made server, application, and desktop virtualization, SaaS, and other cloud computing technologies possible.

Unfortunately for Citrix, Microsoft soon announced a move away from OS/2 to Windows, immediately scuttling Multiuser 1.0’s market viability. Citrix investors, which included Microsoft, kept Citrix afloat and enabled them to release Citrix Multiuser 2.0 in 1992. Multiuser 2.0 allowed up to 5 simultaneous users to remotely access software hosted on a server—and it was fully compatible with Microsoft DOS. Citrix was saved.

For almost two decades after their initial agreement, Citrix and Microsoft agreements primarily concerned one organization leveraging the other organization’s source code. For example, Citrix needed access to Microsoft operating system source code to build out its ICA protocol to develop advanced multiuser capabilities for Windows servers; Microsoft licensed Citrix’ ICA protocol source code to develop Terminal Services, later renamed Remote Desktop Protocol.

Citrix and Microsoft – the Later Years

In 2020, Citrix and Microsoft signed a multi-year agreement to provide joint tools and services to simplify and speed up Citrix customers’ transition to Microsoft Azure®. The agreement also combined the companies’ joint offerings into one transaction solution, which customers previously had to purchase separately.

Unlike previous agreements, which focused on technical alignment, this agreement included technical and business alignment intended to make it easier and faster for Citrix customers to deploy their Citrix implementations on Azure. While the agreement eased implementation and reduced transactional complexity, it also meant that Citrix customers choosing the combined solution had to deploy on Azure—which may not be the optimal cloud platform for their implementation.

At the time of this agreement, Citrix continued to offer customers Citrix Cloud™ as an option to allow customers to manage and host cloud services, (desktops and apps, for example) on any device and/or use cloud-based versions of its products. Citrix Cloud utilized a variety of cloud service providers, including Google Cloud™, AWS®, and Azure, allowing customers to choose the cloud best suited to their applications, users, and business.

This agreement continued through Citrix’ 2022 acquisition by Vista Equity Partners and Evergreen Coast Capital, subsequent merger with TIBCO Software, and evolution to Cloud Software Group (CSG).

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Citrix Transformation to Cloud Software Group

Citrix was in the process of simplifying its go-to-market strategy and product licensing when it was acquired. The evolution to CSG accelerated the process. While the market acknowledged that licensing simplification was long overdue for Citrix, some customers viewed the process as one that reduced their options for leveraging Citrix technology to best serve their business.

One year post-acquisition, Citrix go-to-market was focused on supporting hybrid work environments using DaaS and VDI technology. Additionally, Citrix committed to enabling a simple user experience that remains the same across all devices and use cases. Finally, Citrix committed to providing cloud flexibility, allowing customers to host workloads in Azure, AWS, or Google Cloud, or in all three. 

In March 2023, Citrix made the Citrix Universal Subscription available. The Universal Subscription replaced Citrix Perpetual Software Maintenance, making subscriptions the standard model for Citrix customers. Universal Subscription included Citrix DaaS™ and Citrix Virtual Apps and Desktops™, which allowed customers to run workloads wherever they needed to rather than move everything to a specific public cloud vendor. The Universal Subscription model reinforced Citrix’ commitment to supporting hybrid environments and enabling customers—from medium and large enterprises to Windows ISVs—to utilize the cloud(s) that worked best for their business.

A year later, in March 2024, Citrix announced availability of Citrix Universal Hybrid Cloud, which includes Universal Subscription plus NetScaler® and Citrix Endpoint Management™. This evolution of Universal Subscription reinforced Citrix’ commitment to supporting hybrid work environments and allowing customers to host workloads in the public cloud(s) of their choice.

Then came the April 4^th announcement of a new 8-year deal between CSG and Microsoft that in several ways seems to contradict Citrix’ professed go-to-market direction.

‍The CSG and Microsoft Agreement

The first paragraph of the agreement announcement states that Citrix and Microsoft are “deepening” their relationship to strengthen Citrix and Microsoft’s go-to-market collaboration that will support an integrated product roadmap. Additionally, CSG as a whole is making a significant monetary commitment to the Microsoft Cloud (aka Azure) and Microsoft 365® via adoption of Microsoft Copilot.

What does this mean for Windows ISVs using Citrix to deliver applications to their customers? Rather than allowing customers, Windows ISVs included, to use the public or private cloud that works best for them, Azure will become Citrix’ preferred cloud solution. Over time, the agreement terms could make it difficult for customers to run Citrix on their preferred cloud.

Additionally, Microsoft will enable Citrix to sell Universal and Cloud Platform licenses on the Azure Marketplace. While this might enable SMBs and smaller ISVs and MSPs needing fewer seats than current minimums to buy Citrix, those implementations will be in Azure, which may not be the public cloud of choice for those SMBs, ISVs, and MSPs.

Closer coordination between Citrix and Microsoft may result in a more turnkey solution for mid-size companies, SMBs, and ISVs that delivers capabilities, customization, and security benefits similar to Microsoft 365 Enterprise. While that may work well for mid-size and SMBs, Windows ISVs could find themselves paying for a remote access solution with a significant percentage of features that they don’t need.

This agreement will compel Citrix to evolve its go-to-market that supports hybrid environments and allows customers to use the cloud(s) of their choice to a Microsoft go-to-market that mandates that its customers buy Microsoft and only Microsoft.

If you’re a Windows ISV that wants to make your applications available to your customers from any cloud (not just Microsoft Azure), consider GO-Global® instead of Citrix.

OR

If you’re a Windows ISV that’s tired of paying for Citrix features that you don’t use, and is apprehensive about Citrix’ direction with Microsoft, consider GO-Global.

GO-Global was designed to enable Windows ISVs to publish applications from any public, private, or hybrid cloud, to any device that supports a browser. Using GO-Global, you can deliver Windows applications to your customers at up to 70% less than Citrix. Despite its low cost, GO-Global delivers enterprise-level scalability but is easy to install, configure, and use, with considerably less technology overhead required for implementation, and provides a great user experience, even over a low-bandwidth connection.

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