'For larger installations, I believe the idea of an annuity model will become very attractive'

: David Jones,

Senior VP, Worldwide Sales, Citrix Systems

For Citrix, server based computing, application service

providers and thin clients spell the technology paradigm of tomorrow. At iForum99 in

Orlando, Florida, David Jones was able to espouse this perspective to DATAQUEST's Arun

Shankar. Jones has over 20 years of IT experience with about half of that at Apple

Computer. Prior to that, Jones has worked at Adobe and Macromind.

How does Citrix operate globally?



In the Citrix perspective today, around 45% of our business is international, meaning not
in the Americas. We have three geographic regions and the rest of the world. The rest of

the world includes-Japan, New Zealand, Australia and Asia. We have bundled together

Australia, New Zealand and Asia into one region called APAC-Asia Pacific. So if you look

at 45% of the international revenue-about 10% of that 45% comes from APAC. It is the

smallest of geographies and it is also the fastest growing. We are looking at three

regions globally for accelerated growth in the next three years. One would be Latin

America, the second would be Japan, and the third would be Asia in no particular order.

What prompts Citrix to set up operations in any

particular Asian country?



We have been building Asia out of Australia. The reason for that is not because we are a
western company that does not understand Asia. It is because we bought a technology

company in Sydney 18 months ago and we have a significant number of engineers and

technical competence based in Sydney. You will see us continuing to grow in India and we

are looking at a potential acquisition. I think (we will acquire) someone with strong

server technical background-because it is easier for us to find pure sales people than to

find technically competent people. India is full of technically competent people and there

are a lot of small to medium size systems integration companies doing work with NT and Sun

servers, and network configurations.

The sort of normal model is to put someone to manage

distributors and then add a technical person. We try and see two million dollars of

revenue per sales head and typically one systems engineer can support two sales people.

That is the model we have in the US and Europe. It is different when you are trying to get

ahead of investment in a market, and in those markets we have decided to put in people and

continue to increase the people ahead of revenue.

Was the initial economic slump and recent recovery in

Asia an opportunity or obstacle for Citrix?



I think Asia is a large store of aging machines. And economic difficulties of the last
three years have resulted in a high percentage of desktops being occupied by machines that

are 3-5 years old. Corporate, government bodies and educational institutions have

understandably said that we can continue to work with these devices as money is tight. All

the economies, from what I am hearing are now beginning to sense a lift-off. IT managers

and CIOs throughout the region are saying we need to do something, we need to get current

again, we need to invest in new applications. How are we going to do that? One way is to

keep the desktops and invest in servers and network infrastructure, and use a server-based

approach. Centralize the complexity and distribute the simplicity.



My understanding is that it is quite like in India-the first non-superpower nation to have
a lot more wireless phones than wired phones because of the geographic size of the

country. Rather than laying cables in every corner of the country, which currently do not

exist, it is probably going to be cheaper to put your own satellite network and do it

wirelessly because of the low bandwidth requirement of ICA architecture. The combination

of an old desktop device, thin or fat, wirelessly connected to central servers is very

appealing.

How are enterprises now viewing server-based computing?



What has happened in the last year is, we are getting strategic-level interest from big
companies, saying you know what, maybe we need to build some of our business processes

about this idea of having centralized server farms and storage dotted around the world.

The CEO of General Motors was talking about the fact that they have got MetaFrame-they are

using it in a few places, the pilots are going well-and they want 120,000 seats of this

thing. The problem is that the pilots have been around through a local dealer. He is

saying-we are General Motors. We are talking about 120,000 users in 70 countries. We want

consistent pricing. We want consistent support. We need 24×7 global support from Citrix,

worldwide, in every country and in every language. Clearly a dealer in Detroit cannot do

that. The only people that can do that is Citrix.

What are the models for pricing server-based application

computing?



There are a whole bunch of different models. Application service providers (ASP) set
themselves up and they tend to have an industry expertise. So let us say I am a

professional in human resources and I go and talk to the leading HR software company in

the world, PeopleSoft. I come to an agreement with PeopleSoft to run their application on

my servers. There is a different licensing model that exists between the ASP and

PeopleSoft because now PeopleSoft needs to receive revenue every time a user connects to

the server. We have to do the same thing. We have to provide the ASPs with MetaFrame and a

billing mechanism, whereby they can track who is connected to what server and for how

long, so that every month they can print a statement and send it to the individual user.

There are licensing issues-that are global and cross

borders. What happens if someone is running an application using a security product on a

server farm in the US, which is banned for export to the country where they are operating

from? How do you possibly control that? But these issues have got to be addressed.

What is the marketing strategy for ASP services?



Worldwide, we have 7,500 resellers who make anywhere between 25% and 40% of their income
on a monthly basis selling our products. In some cases, they will continue to sell

MetaFrame to companies or potential users, like we do today. In other cases, those

companies could say we do not want to buy MetaFrame, we just want access to this

application. We are quite happy to use Independent Computing Architecture (ICA) as the

enabling architecture. We could just sell MetaFrame to the ASP and that is it-take the

money and forget about it. Or we could give them MetaFrame and say we would rather, every

time someone connects for an hour, you get 10 bucks and we get a buck.



For larger installations, I believe the idea of an annuity model will become very
attractive. Let us take an example. If my electricity bill is $200 a month, it is like

saying I am going to spend $2,500 and buy a year's electricity. I don't want to do that. I

would rather pay every month for what I use. It is very much like a utility. A lot of CIOs

I have talked to said they would like that model because it allows them to deploy a bunch

of applications centrally and then allocate cost effectively to different departments.

They can monitor the usage and then pay for that usage.

How will usage-based licensing affect your future

revenues?



Our shrink-wrapped products will next year account for 70-80% of our business. Of the
other 30%, 5% will probably come from OEM sales. The balance is going to come from ASP,

enterprise sales and different forms of licensing. We are about to roll out an enterprise

licensing agreement, where basically you get a disc, and on that disc is an unlimited

number of servers and an unlimited number of users. Every time a user connects, it logs

on. When someone wants to become ICA-enabled, they download the software, it registers and

at the end of the month we get the audit trail of how many people downloaded the product.

We bill the company for that number of users. That is not the channel business-channel

business is really about selling shrink-wrap.

How do your partners view the ASP and ICA application

strategy?



A significant number of customers are saying to us-"you know, this is great".
Anything that is really important, we will put ICA up to it. Any network, any of the major

network protocols, and any application. But that is a lie because it is any application

provided it is NT. So we do not do any application today, we do most. People say why do

you guys do NT. It is like asking Jesse James, the bank robber-"why do you rob

banks?" It is because that is where the money is. Most of the problems we solve are

NT-related but there is another set. A lot of the new stuff is being done in Java, a lot

of people are saying it would be really neat if you could have one unifying interface.

How does the future look from a Citrix perspective?



Roger Roberts who was the President (of Citrix), till he retired, said, I think the market
opportunity for Citrix is pretty much limitless. As the speed of change continues to

accelerate, primarily driven by the internet, it is impossible to stay current unless you

want to spend your life doing upgrades. It is just a pain. So I like the idea. I do not

know if you have watched Star Trek but I like the computer. It has a voice interface and

somewhere there is a computer with lots of data and lots of applications and the fact that

your interface is a thin client that uses a keyboard or pen or voice.