Orbital a Remote Boost for Citrix?

Citrix  agreed to purchase Orbital Data Corp., which makes appliances and software that speed the delivery of applications over wide area networks (WANs), for $50 million in cash.

Orbital Data makes WAN acceleration appliances, which eliminate the need for any changes to current network management tools, firewalls, network services or applications.

The machines support up to 300 branch offices and WAN throughput up to 500 megabits per second, making them desirable for remote locations with few IT personnel.

Orbital Data also offers software that can boost WAN performance directly over a remote user’s PC.

Citrix, which makes secure network access hardware and software, said it is purchasing Orbital to improve the performance of its remote-access products, including its Presentation Server and its NetScaler product line.

Citrix said internal tests showed that Orbital Data improved the performance of Presentation Server by as much as five times for end users, especially for remote printing and local file save tasks that necessitate the transfer of large volumes of data over the WAN.

Citrix intends to sell this capability aggressively to its installed base of more than 160,000 Presentation Server customers.

The bid for Orbital Data comes just months after Citrix purchased Reflectent and little more than a year after buying NetScaler.

The three acquisitions have one thing in common: they position Citrix to become a leader in the WAN  optimization space.

This market is red hot because remote workers are increasingly looking to have the same access to data they would have working out of the corporate headquarters.

Workers need secure access without performance degradation, which can occur as application data travels over back and forth many times over WANs.

Accordingly, Citrix’ management is especially excited by the growth in a new niche market.

Citrix CEO Mark Templeton said the acquisition will both strengthen Citrix in its primary market while also positioning it as a top layer in a niche that includes Cisco Systems , Juniper Networks , Packeteer Networks, and Riverbed systems.

Citing figures from market research firm IDC, Templeton said that the market for WAN optimization products was $314 million last year, and is expected to nearly double over the next three years.

“Clearly there is an early stage green field opportunity here,” he said.

The acquisition spree may not be over.

Wes Wasson, vice president of product marketing and strategy at Citrix, hinted that Citrix is still in the market for other technologies that will give it an edge in this space.

Merrill Lynch analyst Ed Maguire was bullish on this acquisition, upgrading Citrix stock to “buy” even though the deal will dilute earnings by two pennies per share through the third quarter of 2007.

In a note, Maguire wrote that the acquisition “fills a widely anticipated strategic niche.”