Citrix just sealed the deal that had the virtualization community buzzing when it was first announced in August, the $500 million acquisition of XenSource. As outlined yesterday at Citrix's iForum user conference, Citrix has finalized its purchase of XenSource and its Xen enterprise server virtualization software. As I noted earlier this year in a blog post, for enterprise IT departments, a rivalry between VMware and Citrix can only be good news, since rivalry equals faster product innovation and more pressure on pricing and support quality. Citrix also announced new products and marketing deals at the conference yesterday. What does this burgeoning battle mean to you?

For starters, choice. Lots more of it than you've had in the past few years, when VMware reigned as the uncontested beauty queen of virtualization. But should you go with a best-of-breed approach for tools, or stick with just one vendor? You may want to keep your options open on that one.

Virtualization as a technology presents one of the biggest opportunities for enterprise IT today because it can save money, improve disaster recovery and, more importantly, speed up business process. It's also one of the richest pools of opportunity for vendors. In announcing the finalization of the XenSource deal yesterday, Citrix said it sees growth in the neighborhood of $5 billion during the next four years in the server and desktop virtualization markets.

Citrix, with its long history in the thin-client computing arena, can now, thanks to the XenSource server software, pitch enterprise IT on a complete solution, spanning from servers to desktops. XenSource's well-known Xen enterprise server virtualization product will now be called Citrix XenServer. Along with this, Citrix will offer its current application virtualization tool, Citrix Presentation server (which stores Windows applications in one data store in your data center, instead of local PCs). Rounding out the Citrix trio, the new Citrix XenDesktop software will allow truly virtual desktops, for which data lives in the data center. (Citrix added that XenDesktop will work with VMware or Microsoft server virtualization software, if the customer prefers.)

Also at the conference, Citrix unveiled new marketing deals with Dell and HP. Dell will preload XenServer in an embedded (basic, low-cost) version on selected server models; giving customers the option to upgrade to the enterprise version. HP will preload XenServer enterprise edition on some of its boxes. Both of these agreements are all about customer convenience; both server vendors emphasize they'll continue to work with multiple virtualization vendors including VMware.