Partners note that the bulk of Citrix’s XenServer product development and marketing machine remains intact.

“Considering that both [Pratt] and [Crosby] are primarily advocates and evangelists for virtualization/open source projects and the heavy technical lifting is done by the Citrix developers, I don’t think this will mean any changes to the XenServer product commitment by Citrix,” wrote Shannon Snowden, consulting partner with Citrix partner New Age Technologies in Louisville, Ky., in an email. “Additionally, if the new company solves the security concerns with cloud infrastructures, then Citrix will be a big beneficiary, so it’s a win-win departure for everyone involved.”

Users are also curious as to whether the XenSource founders will eventually find their way back to Citrix.

“It will be interesting to see what Citrix does next — are they going to let Simon build out this new cloud company and buy it back up?” asked Matt Brown, senior systems engineer for an application service provider and a XenServer user. In the meantime, “I guess it all depends on who the next CTO is and what direction they want to go,” he said

In May, Citrix also lost another CTO, Harry Labana, who left to join AppSense, meaning there are now several vacancies in the public-facing side of the company’s virtualization business. These vacancies probably won’t have an immediate impact, said Gartner analyst Chris Wolf, but “there are a lot of things Citrix has to do here just to keep the marketing machine going and keep customers happy.”

“They put out a very good public response today, but right now it’s words,” Wolf added. “We need to see what Citrix does in the next 3 to 6 months … otherwise you might have some customers that are a little bit nervous going with XenServer on Citrix, because they know [Crosby] and [Pratt] are no longer around. And they might still be involved with [Xen] on the open-source side, but that’s still not the same, from a customer perspective.”

Crosby, Citrix’s CTO, wrote today on his blog that he and Pratt, a Citrix vice president, will be co-founders of a new cloud security startup called Bromium. Bromium remains in stealth mode, but Crosby hinted at its direction in his post:

I remain firmly of the view that virtualization can offer a new toolset that can help to deliver a more secure and trustworthy computing infrastructure. … We are fusing deep virtualization and security systems DNA to build a powerful set of tools that can offer continuous endpoint protection.

Gaurav Banga, the creator of Phoenix Hyperspace, is another co-founder of Bromium,  whose investors so far include Andreessen Horowitz, Ignition Partners and Lightspeed Venture Partners. George Kurtz, worldwide CTO and executive vice president at McAfee, is a board member.

Crosby wrote that he and Pratt “will remain active in our stewardship, contribution to, and promotion of the key building blocks of open infrastructure: xen.org, OpenStack.org, OpenVSwitch.org, the Open Networking Foundation and other projects.” He also emphasized that Bromium “does not intend to compete with any virtual infrastructure or security vendor.”

Crosby and Pratt joined Citrix when the company acquired XenSource in 2007. In a statement, Citrix said, “While we will obviously miss their day-to-day presence as employees here at Citrix, we’re genuinely excited about the Bromium vision and believe it will address some much needed industry challenges that are highly complementary to the Citrix virtualization, networking and cloud strategy.”

The Citrix Store at the show sold all kinds of merchandise, such as these teddy bears.

Dilbert was also among the attendees at Citrix Synergy 2011.

A DJ spun tunes before CEO Mark Templeton’s keynote Tuesday morning.

During the keynote, Templeton and Gus Pinto showed a demo of Angry Birds running on a virtualized Mac desktop.

In the CitrixTV booth, vendor executives and Synergy attendees talked about new products and announcements.

Citrix took out these ads across the street, so Synergy attendees could see them through the Moscone Center’s large, glass walls.

Novell, the “strategic buyer” and the private equity firm have all agreed to the deal and will sign it in three or four weeks, according to the Post. In the meantime, let the speculation begin!

Who’s buying Novell? Let’s take a look at some possible candidates and the odds they’re the “strategic buyer”:

VMware (3 to 1): After VMware announced its exclusive virtual appliance deal with Novell in June, the acquisition rumors started circling. That has VMware as the favorite among many observers, including Gartner’s Chris Wolf, who says it’s not a coincidence that VMware is training Novell’s SUSE Linux Enterprise Server organization as part of that deal.

But there are a few major points that don’t make VMware a sure bet. Most importantly, Novell doesn’t fit the traditional VMware  acquisition strategy, which is to pick up smaller growth companies in an “opportunistic” fashion. Plus, some VMware execs have privately intimated that the virtual appliance deal means much more to Novell than it does to VMware.

Oracle (7 to 1): Unlike VMware, Oracle definitely doesn’t shy away from large acquisitions of major companies. Larry Ellison and co. have made it clear they want to control the entire IT stack, and while the Sun Microsystems deal gave them pretty much everything they need to meet that goal, Novell’s SLES would definitely provide a boost when it comes to the server OS. (Novell has about 16% of the market, and Oracle Enterprise Linux another 11%, according to SearchDataCenter.com’s 2010 Data Center Purchasing Intentions Survey. Add that to the 27% market share held by Solaris, and Oracle would control more than half of the server OS market.)

Also, Oracle’s virtualization strategy focuses heavily on VM templates; adding Novell to the fold would strengthen those offerings, while at the same time weakening VMware’s virtual appliances.

Red Hat (9 to 1): You’re the market leader. Your top competitor is vulnerable and for sale. Why wouldn’t you swoop in? No, I’m not talking about Vince McMahon’s WWF and Ted Turner’s WCW in 2001, I’m talking about Red Hat and Novell today. There have been no indications Red Hat is interested — execs may be content to see Novell split up and see what happens under new ownership — but the deal would make a lot of sense.

Citrix (12 to 1): There’s a clear trend toward tighter integration between the OS and the virtualization layer. Hyper-V comes with Windows Server, and in the ultimate example, KVM is part of the Linux kernel. Acquiring Novell would help Citrix out a lot in this area. The interesting subtext to this speculation is the feud between Citrix and Red Hat: As Red Hat tries to woo Xen customers to KVM, Citrix CTO Simon Crosby has suggested that Red Hat Enterprise Linux customers should move to Oracle or SLES.

Microsoft (15 to 1): These two companies have a long history. Microsoft crushed Novell’s NetWare business in the ’90s, and there was significant proprietary-vs.-open source friction for much of the past decade. But after their 2006 patent agreement, the two companies have grown closer, and now acquisition speculation pops up occasionally. The Novell-VMware virtual appliance deal sure wouldn’t last long if this acquisition happened.

Intel (20 to 1): Just a few months ago, Intel wouldn’t belong on this list. But after acquiring McAfee and stating its intentions to offer a “complete stack,” the chip manufacturer can’t be ruled out. A server OS is a pretty important component of a “complete stack,” after all.

Field (6 to 1): There are plenty of other companies that would make sense as the “strategic buyer,” from IBM to Amazon. And as some of the recent head-scratching IT acquisitions have shown, no company can be completely ruled out. Guess we’ll just have to wait three or four weeks to find out for sure.

Citrix made the VMLogix acquisition announcement today, the first day of the VMworld 2010 conference. The acquisition is expected to close later this quarter, Citrix said.

VMLogix makes LabManager and StageManager, tools designed to help create and manage test/dev and pre-production environments. Since making XenServer free last year, Citrix has put its money-making focus on management tools and other advanced features, and the VMLogix acquisition is another step in that direction.

VMLogix isn’t one of the first names you think about when you discuss third-party virtualization management vendors, but the company is one of the few that supports VMware, Hyper-V and XenServer, which was likely appealing to Citrix.

Shannon Snowden, consulting partner with Citrix partner New Age Technologies, said many XenServer deployments rely heavily on VMLogix for lab management, but support and integration haven’t always been perfect. The acquisition will likely address those issues, he said.

“It makes sense,” he added.

As with most virtualization news these days, there was heavy cloud spin. Citrix titled its press release, “Citrix Expands Leadership in Open Cloud Computing,” and the company said the VMLogix acquisition would “further accelerate its OpenCloud strategy.” The key appears to be VMLogix’s self-service portal, which could come in handy in a private cloud scenario.

Still, at its core this announcement is all about server virtualization — a market where Citrix has had mixed results. In less than two years, the company has lost its status as VMware’s top challenger (to Microsoft). Some observers, like a VMware partner I spoke with today, wonder why Citrix even bothers with server virtualization, given its desktop virtualization success. This partner said the VMLogix acquisition doesn’t make sense, because server virtualization doesn’t seem like a top priority for Citrix.

On the other hand, Citrix’s free XenServer strategy appears to be working, and the VMLogix acquisition falls right in line with that strategy.

Is this the dawn of a new era between these two longstanding rivals? Um, no. It’s just a way for Citrix to be more involved at VMworld 2010.

Last year, as you may remember, Microsoft and Citrix said they weren’t allowed to demo competing products on the VMworld floor because of changes to VMware’s exhibitor agreement. The brouhaha left both vendors with very small booths, searching for creative ways to get their messages across. Microsoft employees wore T-shirts that vaguely alluded to the controversy, from what I remember, and Citrix took out ads on taxis throughout San Francisco.

Apparently that wasn’t enough for Citrix, which became a VMware partner “in order to participate more fully and openly at VMworld,” according to company blogger Kim Woodward. Citrix will be a silver sponsor of VMworld and have a booth twice as large as last year’s. Microsoft hasn’t made a similar move, though.

One of the big questions around the announcement: Why Novell? As News Director Alex Barrett wrote in her story, “Red Hat still leads Novell in terms of Linux market share by a wide margin, leading some to wonder why VMware didn’t partner with that company instead.”

VMware isn’t the only virtualization vendor to spurn Red Hat lately. In fact, this latest news makes you wonder if Red Hat’s virtualization strategy is backfiring.

VMware said it chose Novell because of SUSE’s broad ISV support, particularly with SAP. But there’s more to it than that. As Barrett pointed out, “Red Hat has been pursuing its own virtualization strategy — first with Xen, and more recently with KVM — putting it directly in VMware’s crosshairs.”

The virtualization tide first started to turn against Red Hat back in April, when Citrix went on the attack. (Citrix, with its flag firmly planted in Xen soil, is especially threatened by Red Hat’s KVM push.) So CTO Simon Crosby countered by encouraging Red Hat Enterprise Linux (RHEL) customers to move to SLES or Oracle Enterprise Linux.

I wrote at the time that Red Hat can’t afford to turn off its core customers — admins and engineers who work with RHEL — in its pursuit of the virtualization market. Well, the company is already turning off the core vendors that it may have been better off partnering with instead. Customers may not be far behind.

It’s a serious issue for the company as its annual Red Hat Summit approaches. The show begins Tuesday, and I’ll be there covering this topic in depth.

The Xen vs. KVM debate is not new, but it has definitely been picking up steam as of late. Red Hat Enterprise Linux 6 has given Xen the “let’s just be friends” speech and moved in with KVM. Several major hosting providers are switching their platforms from Xen to KVM. And many Linux diehards say Xen is a huge pain to manage.

The battle lines are drawn, and the fate of the open source virtualization market hangs in the balance. (How’s that for overdramatic? I think I’ve been watching too many “Lost” commercials.)

Anyway, the ramifications of this potential shift may also affect the open source OS market. Leading the charge on this side of the battle is Citrix CTO Simon Crosby, the co-founder of XenSource. Red Hat is trying to move customers off Xen, and now he’s trying to move customers off Red Hat.

“If you approach your virtualized world with a Linux/RHEL based mindset, then I recommend you consider switching to Oracle Enterprise Linux,” he blogged last week. “It is a superior, enterprise class version of RHEL. … Alternatively, if you’re wary of giving Larry more control than he already has over your environment, Novell SUSE Linux offers a superb enterprise Linux platform.” (Note that Crosby linked Oracle CEO Larry Ellison’s name to a picture of his massive yacht.)

I’ve previously said that Red Hat has nothing to lose by switching from Xen to KVM. I meant that in terms of Red Hat’s standing in the virtualization market. VMware, Microsoft and Citrix are way ahead of Red Hat there. (And as Crosby blogged, “Having failed to capitalize on Xen, Red Hat needs a ‘differentiated’ story in virtualization in order to regain credibility.”)

But Red Hat has a ton to lose in the enterprise Linux server OS market, where it’s the leader. Sure, the Linux community may be in love with KVM, but Red Hat butters its bread thanks to the IT admins and systems engineers who work with RHEL. The company can’t afford to turn off these core customers in its pursuit of the virtualization market.

Citrix attributed its record profits to an increased interest in desktop virtualization and the launch of XenDesktop 4. But its quarterly revenue grew by only 8% compared to Q4 in 2008, and revenue from product licenses and license renewals grew 4% and 6%, respectively.

The really big growth came from technical services and online services, which saw revenues increase by 18% and 20%, respectively.

Citrix’s press release did not mention XenServer at all. Skeptics would point to that as just another indicator that Citrix is giving up on XenServer. But the company has said all along that, by making XenServer free and open source, one of the goals is to drive more services business. Judging by these financial results, that strategy is working.

Citrix’s results come just days after VMware reported that its fourth-quarter profits fell by 49% — although VMware earnings for the quarter did beat Wall Street expectations by more than $50 million.

Oracle is sizing up Citrix for a possible acquisition, according to Briefing.com (via The Register). The move would give Oracle its biggest stake yet in the virtualization market — not only in server virtualization, where Oracle VM hasn’t exactly lit the world on fire, but in desktop virtualization, where Citrix is the leader.

Still, an Oracle-Citrix acquisition wouldn’t guarantee virtualization success. A lot depends on what Oracle would do with Citrix’s technology and products. If Oracle were to take the same approach it took with Virtual Iron — discontinuing its products and canceling its reseller agreements — Citrix customers would be up in arms.

Plus, the whole open source issue would come into play with an Oracle-Citrix acquisition. Even though Oracle VM is based on Xen, Oracle is first and foremost a proprietary software company. There would inevitably be friction with the open source community.

As an aside, it would also be fascinating to see the interactions between two of the industry’s most outspoken and controversial executives (Oracle CEO Larry Ellison and Citrix CTO Simon Crosby). Here’s some reaction from around the Web to the Oracle-Citrix acquisition rumors:

Tarry Singh, Sustainable Global Clouds: “VMware and other players will be stunned … Oracle has already declared war on many fronts and by doing a Citrix acquisition it will definitely make a massive statement to the virtualization market.”

Jesse Freund, Cisco analyst relations manager: “Oracle buying Citrix: Um, why? They already have duplicates and triplicates of those assets. Other than to annoy Microsoft, of course.”

Gabriel Pagan, virtualization consultant: “Oracle buying Citrix? Makes no sense, Citrix is too much up Microsoft’s [rear] for Oracle”