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Summary

Transformation of the end-user computing (EUC) market is driving a new wave of innovation in the industry. Under Mark Templeton's guidance, Citrix Systems has been a leading, visionary vendor over the past 20 years, delivering solutions to support the concept of anywhere, anytime, any-device user access.

Product and license revenues are lower, but cloud services revenues are up

Citrix Systems made three major announcements on July 29, 2015. The first was the release of its second quarter 2015 results. A year-on-year comparison showed that product and license revenue had decreased 12%, but cloud services revenue had increased 11%. This shift in how software is purchased corresponds with the findings of the recent Ovum Data Center Survey 2015, which show that on average, 46% of applications/services are delivered internally from "owned" products. Cloud services are the second most popular option, with 20% market penetration. However, this mix is set to change over the next three years. For example, the survey predicts ERP solutions moving from 71% internally deployed in 2015 to 50% internally deployed in 2018, with cloud services being the big winners.

Citrix's results clearly show that cloud services will drive its revenue growth. Analysis of Citrix's figures shows that if cloud services are excluded, it posted a decline in quarterly revenue (Americas up 1%, EMEA flat, Asia-Pacific down 8%), whereas overall, it posted 8% revenue growth for the quarter.

In a second announcement, Citrix reported that Mark Templeton will retire once a successor has been found. Ovum regards Templeton as one of the industry's most respected visionaries, having transformed Citrix over the past 20 years. The third announcement was a cooperation agreement with Elliott Management Corporation, an investment firm that owns 7.5% of Citrix's stock. Ovum believes this will inject fresh thinking in terms of how Citrix can exploit this growth in cloud services, and will enable a stable transition from the Templeton era.

Appendix

Further reading

Evaluation of Core Desktop Virtualization Technologies in 2015, IT0022-000330 (April 2015)

Author

Roy Illsley, Principal Analyst, Infrastructure Solutions

roy.illsley@ovum.com

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