In a surprise move, Citrix Systems announced that it intends to purchase XenSource to gain a foothold in the lucrative virtualization market space. XenSource is a name that might be unfamiliar to most people outside the Linux world.

Xen’s main product, known as Hypervisor, allows a single computer to run multiple operating systems at the same time. Xen’s hypervisor is open-source and is included with Linux server distributions from Red Hat and Novell.

XenSource also offers a commercial product called XenEnterprise, which is based on the Xen software and technology. It is suspected that this will make up the heart of the first virtualization offering from Citrix.

The Citrix purchase of XenSource for $500 million US will make Citrix able to compete in one of the fastest growing market segments in information technology. Citrix is not the only one to see the growth in the virtualization market space, as Microsoft is also currently developing its own virtualization product.

The Microsoft virtualization product is said to be slated to ship sometime in the 3rd quarter of 2008, which does not give Citrix much time to become an established player in the virtualization marketplace. Currently, VMware dominates this market space, but VMware will need to put on its game face as competition is about to heat up in this market segment in the next 12 to 16 months.