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8/29/06 — The BOB -- that's Branded Office Box, for the uninitiated -- which Microsoft Corp. and Citrix Systems Inc. announced last week could be the first salvo in an impending showdown between the software giant and long-time partner Cisco Systems Inc. This BOB is quite a different from Microsoft's erstwhile Bob, analysts say, and -- in scope if not in practice -- will pit Microsoft against Cisco in the burgeoning branch office call center segment.

Microsoft and Citrix announced plans to jointly develop and market a Citrix-branded BOB. This offering -- slated to ship in the second half of 2007 -- will be based on Citrix's WANScaler product line and on Microsoft's Windows Server operating system and Internet Security and Acceleration (ISA) Server.

Microsoft's move signals a change in its mostly friendly, and often cooperative, relationship with Cisco, analysts say.

"Microsoft clearly considers Cisco a significant threat to its dominance in the enterprise software market, and views the branch office as a critical battleground for application and network architectures," write Gartner analysts Joe Skorupa, Mark Fabbi, Mark Margevicius and David Willis.

But why now? In other words, why -- after years of downright comity -- has Microsoft decided it was high time to lock horns with Cisco? In part, the Gartner quartet write, because the nature of the game has itself changed. "Cisco and Microsoft have avoided direct competition until recently, but the merging of networking, security, storage and applications made this confrontation inevitable," they argue. "Microsoft is launching new networking capabilities within Vista and the 'Longhorn' version of Windows Server, and is pursuing partners in the voice arena...Gartner believes we can now expect much more conflict between Cisco and Microsoft -- a battle we originally predicted in 1997."

For example, the Gartner braintrust points out, Microsoft recently cozied up to Nortel Networks on the VoIP front. This is just the beginning, they predict. "Microsoft is building a team of networking vendors to compete with Cisco. Citrix brings credibility in branch office application delivery through its Presentation Server and NetScaler products. By [aquiring] Orbital Data, Citrix now has an end-to-end application delivery family that is broader than Cisco's. With a rapidly expanding portfolio, good strategic partnering and software-centric channels, Citrix is a serious competitor and potential roadblock to Cisco's aspirations to control application delivery," they write. "The future WANScaler appliance promises to provide WAN optimization, content distribution, security and branch office services. When combined with Microsoft's marketing might and strategic customer relationships, this product is likely to quickly appear on prospective customers' shortlists once it is released."

In this respect, they conclude, the Microsoft-Citrix accord is a game-changing one. "Gartner believes this partnership will change the selling dynamic for WAN optimization controllers (WOCs), BOBs and -- to a lesser degree -- application delivery controllers. Because Cisco will not be the default choice, we believe its influence will likely weaken. In addition, sales cycles will likely lengthen and smaller vendors will find selling tougher," they contend.

Not that the coast is entirely clear for Microsoft and Citrix, of course. "[T]he Microsoft/Citrix partnership will face some challenges, and the published product delivery date is very aggressive. WANScaler is unproven beyond very small deployments, and it lacks features such as bandwidth management, quality-of-service and voice-over-IP optimizations," the Gartner braintrust points out. "In addition, porting the WANScaler code to Windows Server and integrating ISA server will be very challenging. Moreover, Microsoft has had discussions with other WOC vendors, so Citrix may soon have rivals for Microsoft's attention."

This last point is of no small importance. Time and time again, Microsoft has proven itself to be a decidedly self-interested partner. Consider its relationship with Citrix, which hasn't always been one of sweetness and light. The two famously locked horns nearly 10 years ago, after Microsoft announced plans to independently develop its own multiuser extensions for Windows NT -- even though Citrix had already developed its own multiuser implementation, then called WinFrame, with the expectation that Microsoft would license it. Microsoft ultimately did right by its partner -- but only after a period of uncertainty. Stephen Swoyer

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