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Microsoft and Citrix Systems announced a new partnership on Aug. 23 through which the two vendors have agreed to build a network appliance meant to facilitate faster, more secure delivery of business applications services to customers’ distributed operations.

The two companies signed a letter of intent to develop and market of a new multifunction appliance sold by Citrix that will be based on Microsoft’s Windows Server operating system and Internet Security and Acceleration (ISA) Server software package. The product will also include Citrix’ recently-announced WANScaler technology, which was created via its acquisition of networking software and appliance maker Orbital Data for $50 million on Aug. 7.

The companies said that they expect to sign a definitive agreement to begin development of the device by the end of 2006.

The new hardware, which is aimed at helping large and mid-sized companies foster tighter interaction between applications located in corporate data centers and end users working with those systems in branch offices, builds on the firms’ previous co-development of Citrix Presentation Server, which promises to similarly extend the reach of Microsoft’s Windows Server and Terminal Services products.

The appliance will allow companies to better support distributed services vital to doing business from facilitating everyday tasks such as print and file functions, to speeding performance of enterprise applications, officials from the two firms said.

The partners contend that the planned launch of the device represents the introduction of a new genre of appliance specifically designed for use in branch offices that combines the benefits of advanced wide area network (WAN) optimization technologies with consolidated services for systems access, file functions such as printing and contact with back-end databases.

Businesses are increasingly challenged by a maelstrom of converging trends including mobility, globalization and regulatory compliance, driving them to seek technologies that will help maintain performance and security of their applications from a central point, executives from the two companies said. The technology providers maintain that firms are seeking integrated tools to address those problems in the name better empowering workers in field offices while retaining tight control over their IT operations.

According to research published by Citrix, which is based in Fort Lauterdale, Fla., roughly 55 percent of all employees at enterprise companies currently access all of their mission-critical business applications from a remote office location. Despite all the money invested in improving bandwidth over the last decade, the partners contend that most companies still experience lowered systems performance, while incurring new security risks, before applications reach the intended user.

“A lot of customers are telling us that they have fewer IT staff members in their branches and need better tools to make systems faster and easier to manage,” said Bala Kasiviswanathan, group product manager at Redmond, Wash.-based Microsoft. “You have issues of compliance that need to be extended and supported at the branch, and the need for workers in those offices to continue to work even when centralized systems go down.”

Click here to read more about a branch-in-a-box offering from Nortel.

For Microsoft the partnership marks only the latest in a string of strategies aimed at helping customers better support distributed computing operations. In July, the software maker introduced a new package aimed directly at branch offices of larger companies, which includes its Windows Server R2, Internet Security and Acceleration (ISA) Server SP2, Virtual Server 2005 R2 and System Center management products.

Citrix officials are hoping that the appliance helps the company attract more customers using Microsoft infrastructure technologies by integrating a range of applications that have typically been consumed by enterprises as point solutions.

“This product won’t simply address first order of business issues, it addresses a higher order of consolidation going on in the branch office setting that demands everything in a single appliance that doesn’t need to be managed on site, customers are telling us that they need a way to make these technologies easier to manage,” said Wes Wasson, vice president of product strategy in Citrix’s application networking group.

“The types of problems we’re trying to solve are an even bigger issue when mergers, partners and offshoring are involved; as the variables increase issues of performance and continuity become more distinct,” Wasson said.

Industry watchers said the partnership appears to make sense based on success the two companies have previously enjoyed in targeting customers that already use their respective technologies together. As the vendors continue their push to find a way into corporate data centers, establishing a “beachhead” in the branch office could be a solid strategy, at least one expert observed.

“Microsoft and Citrix are working to understand the challenges faced around IT investment in the branch, and address the issue of pricing sensitivity that need to be balanced with businesses concerns that the branch office is a very strategic face for interacting with customers,” said Cindy Borovick, analyst with Framingham, Mass.-based IDC.

The analyst said that the tie-up should place the partners squarely in the growing market for such technologies that help support de-centralized IT operations for enterprises.

“Microsoft-Citrix makes sense because this is really a network focused problem, we also see Cisco positioning applications networking and routing as way to do this, and see other people approaching it from a hardware perspective, such as IBM with its branch-in-a-box strategy,” Borovick said.

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