As you may recall, I write about virtual desktop stuff from time-to-time. Teradici recently launched a new workstation remote access package for engineers and CAD/CAM types. My 451 report on the topic is out, co-authored with Scott Ottaway.
Teradici is an interesting company in this space as they get most of their revenue (70-75%) from OEM’ing their PCoIP technology to the likes of VMware, Amazon, HP, and many others for embedded use in those OEM’ers products and services.
Here’s the 451 Take:
As the needs for end-user computing devices continue to fragment, Teradici is wise to expand its portfolio and look downmarket. Its focus on specific use cases with high-end line-of-business applications is smart because of the potential revenue for these applications. We feel there will be a constant need for virtual desktops in the engineering and security fields, which like the controlled access. As new devices get into companies through BYOD programs, the demand for virtual desktop services is likely to increase for companies that need to support access to ‘traditional’ desktop applications from these new devices. Adding the ability to connect to workstations as a service in the public cloud should be appealing, especially for smaller businesses that may want to shift large up-front capital costs to ongoing operating expenses, renting monthly instead of buying up front. The company will have to pay special attention to building up its direct sales and marketing operations and expand beyond single OEM customers to maximize its growth opportunities.
It’s a nice strategic move for the company to try and amp up it’s non-OEM business.
Citrix has a new DaaS service provider survey out. I’m often overly harsh on virtual desktops and, by extension, DaaS. I’m always curious who actually uses this stuff, so the vertical breakout is interesting:
The largest number of service providers who responded listed financial services, healthcare and manufacturing as the vertical markets they served. This is an interesting change in the vertical market ranking compared to the December 2011 Citrix Service Provider survey. In 2011, service providers indicated their leading verticals were healthcare, legal and public sector/government. Manufacturing finished fifth in the 2011 survey ranking of most popular verticals and third in the 2014 survey. The growth of manufacturing as a DaaS vertical is a keen indicator of new trends in the vertical market ranking, which is usually dominated by healthcare and financial services.
Citrix has, of course, chosen to not sell DaaS directly but rather be a supplier for others who’d like sell DaaS. They seem to be doing well according to what they reported to us for a recent 451 report: 50% y/y growth from service providers. Amazon and VMware, and others, have gone the opposite route. We’ll see what happens.
One of our new, excellent analysts Scott Ottaway and I wrote up a report on Citrix’s Workspace as a Service portfolio and strategy.
Clients can read the full report, but here’s the 451 take:
Citrix reported impressive double-digit revenue growth and total licenses from its cloud service provider channel. Citrix also launched multiple new technologies – XenApp, XenMobile, ShareFile – as well as announced a cloud-managed Workspace Services option that service providers or enterprises can leverage to optimize, automate and more easily manage WaaS infrastructure and users while still maintaining the end-user relationship. Unlike VMware, Amazon Web Services or Microsoft Azure, Citrix will not directly compete with its WaaS service provider channel by offering end-to-end WaaS.
While the WaaS market continues to grow rapidly and Citrix continues to offer multiple new technologies and services, service providers need to carefully evaluate the margin opportunity and operational costs versus end-user demand and willingness to pay for the new technologies such as mobile-optimized applications and cloud storage. With the entrance of global cloud providers into the WaaS market within the last six months and the potential for commodification of workspace pricing over time, 451 Research believes that service providers need to carefully evaluate the market and margin opportunity of new expanded WaaS capabilities and to not overprovision for low-opportunity use cases or to reduce margin opportunity by competing solely on price per workspace.
When it comes to making things cheap, few companies have the zeal and credibility of Amazon. While new, mostly non-Microsoft devices are rapidly changing and fragmenting the end-user device market, there’s still a palpable need to support existing Windows applications. DaaS seems like a viable ‘green screen’ strategy for supporting these corporate applications on new devices. While some of the early reviews of Amazon WorkSpaces have surfaced, the usual bucket of 1.0 hiccups, like speed and locale shenanigans, will undoubtedly be ironed out. The DaaS space is just emerging as a broad market, and we predict many players on this scene, each hopefully figuring out new and unique ways to differentiate.
Part of the coverage in my practice at 451 is the Desktop-as-a-Service and virtual desktop market, so I poke my head into that space from time-to-time. As I discussed in a recent (yet to be published) Connected Culture and Oblique Strategies podcast, the DaaS market is looking interesting. A press release quote I provided to a 451 client , GCI, sums up my current feelings:
“This is looking like a good time to enter the Desktop-as-a-Service (DaaS) market,” said Michael Coté, Research Director, 451 Research. “Demand should see growth from BYOD initiatives as employees look to use their own devices to access corporate applications and data. Virtual desktops have technically been a good answer for the delivery and security functionality needed there, but the reality of doing those installs pre-cloud has limited virtual desktop’s wide acceptance, especially for small and medium sized businesses. The fungibility and affordability of cloud infrastructure is primed to fix that limiting factor, creating an exciting window of opportunity for DaaS.”
Earlier this week VMware announced it’s Desktop-as-Service (DaaS) offering, building on-top of the recently acquired Desktone asset. I have a 451 report for clients up.
Here’s the 451 Take:
VMware is launching a desktop-as-a-service (DaaS) offering at an appropriate time, both beating Amazon to the 1.0 punch and playing into key trends that seem to be giving virtual desktops a new breath of life. There’s been a steady increase in the bring-your-own-device (BYOD) trend, tightly coupled with the fragmentation of the PC market brought on by mobility: tablets, Apple and Android – not to mention the continued spread of the Web as a major ‘platform.’ Meanwhile, the profusion of Windows-based applications and other ‘legacy’ corporate IT services are not always ready to convert to the new platforms, opening up the need for virtual desktops. Finally, cloud infrastructure technologies and business models are making the managing of the back end for virtual desktop systems more cost-efficient. The confluence of these trends points toward companies tilting at the virtual desktop windmills again, but this time with a ‘SaaSy’ lance.