VMware (NYSE: VMW ) has been seeking growth by expanding its end-user computing segment and taking on competitor Citrix Systems (NASDAQ: CTXS ) in hot areas such as desktop virtualization and mobile device management. What are the big moves that VMware has been making, and will they help the company finally close the gap with Citrix?
Horizon 6 news
Among the big announcements that VMware has recently made in the end-user space, the most significant involves changes that are coming to Horizon, VMware's virtual and remote desktop platform. In particular, VMware announced that Horizon 6 will include support for remote desktop session host, or RDSH, and published apps.
VMware already has support for virtual desktop infrastructure, which is a powerful, yet complex and expensive system, for many businesses. Horizon now also supports Microsoft's RDSH, a more popular approach to remote desktops due to its lower requirements and costs. Starting with Horizon 6, the two solutions can now both be managed through the same platform, which also manages individual virtualized applications.
Why is this a big deal? Simply, it means that VMware is now providing a legitimate alternative to Citrix's core XenDesktop and XenApp products, which form the bulk of Citrix's mobile and desktop division that earned $1.5 billion in 2013. To make matters worse for Citrix, VMware has made it possible to run Horizon on top of Citrix's XenServer back-end, making it easier for current Citrix customers to try Horizon and possibly migrate to it.
The other piece of big news was VMware's acquisition of mobile-device-management, or MDM, provider AirWatch in February. MDM is a growing and fragmented market driven by the increasing use of mobile devices in enterprise environments, and IT's need to control and update all those devices. According to Forbes, MDM is estimated to become a $1.8 billion industry by 2016, and until it was acquired, AirWatch was the market leader.
Besides the direct revenue from AirWatch, the acquisition will provide VMware with an important addition to its portfolio of end-user products. Also, this is another jab at Citrix, which had its own acquisition in early 2013, buying MDM provider Zenprise and integrating its product to release XenMobile later in the year.
Odds and ends
VMware has made several other moves in end-user computing, which didn't cause as much of a stir as the Horizon 6 and AirWatch announcements, but do show the level of VMware's commitment. First, in March the company released Horizon DaaS, a desktop-as-a-service offering running on VMware's cloud. In terms of pricing and functionality, Horizon DaaS competes with Amazon.com's (NASDAQ: AMZN ) DaaS product, WorkSpaces, which was released last November.
Also, VMware announced that it will be supporting NVIDIA's virtual GPU technology within the next year. This technology makes it feasible to provide GPU acceleration for virtualized graphics-intensive applications such as Photoshop or AutoCAD. Currently, only Citrix supports vGPU, but once VMWare gets in on it, the company will be able to compete for the estimated six-fold increase in workspace virtualization that vGPU will bring.
What this all means
After the Horizon 6 announcement, Citrix was quick to point out that its solutions still lead the market, and derided VMware's announcement as "press release messaging or 'checkbox' functionality." However, speaking on the first-quarter conference call, Citrix CEO Mark Templeton admitted that Citrix is "taking a number of direct shots from competitors."
It's true that Citrix's solutions still provide features that VMware's Horizon suite does not, but the gap is closing. Desktop and application virtualization requires a lot of IT investment, and it's unlikely that current Citrix customers will switch to Horizon immediately. But, for new customers, or current customers facing major and difficult upgrades, there is now an alternative to Citrix. Plus, since the end-user virtualization market is heating up, that's good news for VMware.
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.