The recent announcement by Citrix indicating that they are releasing their flagship virtualization engine, XenServer, for free is a bold step towards increasing their market share in the SMB space. After an anemic 2008, where they posted only 4% growth and downsizing 10 percent of their staff, this move puts them in the forefront of the news.

Citrix XenServer offers virtualization based on the open source Xen engine. This is the same release that was previously sold as the enterprise product. Included in the package is their multi-node management interface, live motion of VMs from one node to another, and integrated storage management to support host based logical volume management. These features are more versatile and diverse than VMware’s free offering, ESXi, giving them an edge in the free hypervisor marketplace. While comparison to ESXi grants Citrix XenServer the edge with features such as Live Motion that aren’t offered by VMware without VCenter and licensing.

This puts VMware on notice that they will have significant competition in the SMB space. XenServer has more features than the free ESXi offering, but not as mature of feature rich as VMware’s VI3 Virtual Infrastructure. I don’t see enterprise customers looking to Citrix, but at the price point, it may open a few doors in the smaller marketplace.