Who Will Be the Big Winner When GPUs Move to the Cloud?

Desktop virtualization is set to explode in the coming years as new technologies finally make it possible to deliver graphics-intensive applications from the cloud. Which companies are making plays in this market and who will be the big winner?

Jun 4, 2014 at 7:20PM

Desktop virtualization is coming to enterprise, as many companies are beginning to serve their employees' applications and data from a cloud, rather than having said applications and data on employees' computers. Virtualization providers Citrix Systems (NASDAQ:CTXS) and VMware (NYSE:VMW) maintain that desktop virtualization brings about a reduction of resource need, simplified IT administration, improved security, and increased productivity, as users can access workstations from different locations and devices.

But, while basic productivity applications work well when served up this way, graphics-intensive applications, which would normally be accelerated with a GPU such as those provided by NVIDIA (NASDAQ:NVDA), do not. Instead, they either overwhelm the server's CPU or need to be throttled back, providing a poor user experience. In other words, although it's been possible to virtualize the workstation of a project manager who uses Word and Excel, it was effectively impossible to virtualize the workstation of a designer who uses Photoshop or an engineer who uses AutoCAD.

NVIDIA to the rescue
The first step toward improving this situation came in 2012 with the introduction of GPU pass-through technology, which allowed a dedicated GPU to be assigned to a virtual desktop. This provides good performance for the user, but it is often impractically expensive, as each virtual desktop requires its own GPU, whether the user is making full use of this or not.

The real breakthrough came with the introduction of NVIDIA's Grid product in early 2013. Basically, NVIDIA Grid uses NVIDIA's Kepler architecture and provides an environment in which the GPU can be used in a virtualized setting and shared by multiple users. The immediate use case for this was cloud-based gaming, but it wasn't long before Grid was applied to desktop virtualization as well.

Who provides what?
Even though the desktop virtualization opportunity has been heating up, one company, Citrix Systems, has made application and desktop virtualization its core business for quite a while now. It's, therefore, not surprising that Citrix was the first to provide full support for NVIDIA's graphics virtualization. Since the 7.1 release of its XenDesktop product in October 2013, Citrix supports both GPU pass-through and multi-user GPU virtualization.

Citrix's main competitor in desktop virtualization is VMware, a much larger company, and one with deep pockets thanks to its lucrative server-side virtualization business. VMware is playing catch-up to Citrix in desktop virtualization, but CEO Patrick Gelsinger recently stated, "We are the aggressor and we are winning share."

Currently, VMware's Horizon View supports GPU pass-through, as well as a slower version of multi-user graphics virtualization called virtual shared graphics acceleration (take a look at the video below for a comparison between current graphics performance with Citrix and VMware). But, VMware is catching up. In March, it announced full support for NVIDIA's virtual GPU, and will probably make this available to customers by the first half of 2015.

NVIDIA vGPU vs. VMware vSGA. Source: Gunnar Berger/YouTube.

The giants on the side
Two other big players have stirred up the virtual desktop market in the last year. Last November, Amazon.com (NASDAQ:AMZN) launched a virtual desktop service called WorkSpaces on its Amazon Web Services platform. While WorkSpaces doesn't currently support NVIDIA's virtual GPU, AWS does, and Amazon.com has said it will add the support to WorkSpaces if customers request it.

This May, after months of rumors, Microsoft (NASDAQ:MSFT) announced Azure RemoteApp, a service that delivers Windows applications from Microsoft's Azure cloud. RemoteApp is still in beta and Azure (and therefore RemoteApp) doesn't currently offer any kind of GPU. But, with Microsoft's "mobile first, cloud first" strategy, Azure will certainly be developed further, and GPU support might not be far off.

What this means for investors
Desktop virtualization is clearly an exploding market. Patrick Moorhead at Forbes estimates that workstations will increase from the current 100 million  to a staggering 600 million workstations that can be virtualized, thanks to NVIDIA's Grid technology.

Who will benefit from this? Citrix, VMware, and others will continue to fight for share of this market, requiring costly investments and probably causing a decrease in prices down the line. The opportunity is definitely there, but so is the competition.

The inevitable conclusion is that the real winner will be NVIDIA. Once desktop virtualization becomes mainstream, competition in the virtual GPU space will also increase. For the foreseeable future, however, NVIDIA is the only provider of virtual GPU technology, and it's set to benefit the most from the predicted six-fold increase in the desktop virtualization market.

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on Amazon.com at its IPO, and then just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure-play" and then watch as the industry -- and your company -- enjoy those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.

Srdjan Bejakovic has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Nvidia, and VMware. The Motley Fool owns shares of Amazon.com, Microsoft, and VMware. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers