Desktop Virtualization: Microsoft, VMware in Cost Smackdown

Tighter bond with Citrix

Microsoft's new desktop virtualization initiatives announced yesterday are a long-anticipated move to make desktop and application virtualization easier and cheaper for enterprises. But it's also part of a broader Microsoft strategy to capture market share from virtualization arch-rival VMware.

Desktop virtualization is still a nascent technology, but it does offer the kind of flexibility and ROI that enterprises are looking for, especially ones that are migrating to Windows 7 and are worried about application incompatibility. Microsoft's desktop virtualization model, including VDI (virtual desktop infrastructure), promises to rein in desktop costs, improve security and management and speed up the delivery of new applications.

One key part of the sweeping announcements, covered in an hour-long Webcast, is a simpler and cheaper model for licensing Windows in a virtual desktop environment. Specifically, on July 1, Software Assurance customers will no longer have to buy a separate license to access Windows via a VDI.

Moreover, for customers that use devices that don't qualify for Software Assurance, such as thin clients and PCs used by contractors, there will be a new license called Windows VDA (virtual desktop access) available for $100 per device per year. This license will allow users to still have access to their complete virtual desktop outside the corporate network on devices such a personal laptops and airport kiosks.

But from an industry perspective, the most noteworthy aspect of Microsoft's virtualization announcements is the company's tighter bonding with partner Citrix to bundle each other's virtualization software, in an effort to gang-tackle virtualization market leader VMware. While well ahead of Microsoft on the server management side of virtualization, VMware is now scrambling to stay ahead in the desktop space, says Chris Wolf, senior analyst at Burton Group.

"Vmware had a two-year lead in desktop virtualization, but it is only beginning to take it seriously," says Wolf. "Citrix and Microsoft want to take on VMware in this space, and they're closing the gap here. Vmware needs to step up its game."

To this end, VMware recently released a new version of the ThinApp application virtualization software to ease migration to Windows 7.

Microsoft and Citrix are merging technologies, but they are also giving customers bargain deals. In addition to merging Microsoft's 3-D graphics technology for virtual desktops, called RemoteFX, with Citrix's high-definition HDX technology, the two companies will offer a price-cutting promotion called "VDI Kick Start" from March 18 until Dec. 31, 2010.

VDI Kick Start allows existing Microsoft customers with CALs (client access licenses) to pay $28 per desktop for up to 250 users to get the Microsoft Virtual Desktop Infrastructure Suite, standard edition, and Citrix's XenDesktop VDI Edition for one year. This comes out to be approximately half the typical annual license cost.

The other offer from Microsoft and Citrix is a more direct confrontation with VMware. Called "Rescue for Vmware VDI", it's a promotion that lets SA licensed Microsoft customers replace their VMware View licenses for free. VMware View customers will get up to 500 XenDesktop VDI Edition device licenses and up to 500 Microsoft VDI Standard Suite device licenses for no charge for a full year in exchange for their VMware View licenses. Like the "VDI Kick Start" promotion, "Rescue for VMware VDI" is available from March 18 through December 31, 2010.

"This is for customers we've spoken to who maybe had a great experience with VMware with servers and then rushed out to do the same thing on the desktop and ran into a brick wall with poor user experience and scalability and ROI problems," says Wes Wasson, chief marketing officer at Citrix.

It's too early to declare a winner in desktop virtualization - because the market is so raw, says Burton Group's Wolf. But he thinks VMware executives should be on high alert over this new assault from Microsoft and Citrix.

"VMware should be worried about this," he says. "If they're not, they're doing something wrong."

Shane O'Neill is a senior writer at Follow him on Twitter at Follow everything from on Twitter at

Read more about virtualization in CIO's Virtualization Drilldown.

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Shane O'Neill

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