Are we on the cusp of watching a "Race to the bottom" of desktop virtualization pricing?

If desktop virtualization continues to progress the way it has been, we may start to see a price war instead of a feature war.

VMworld is coming, and I very much doubt I'm going to walk away with the impression that VMware has taken their foot off the accelerator when it comes to their competition with Citrix. Frankly, I think both companies are about to find out where the governor kicks in, because there aren't that many huge features left to add. I wrote about this a bit last October in an article titled "At what point do we say that VMware has drawn even with Citrix?" but today I want to take a look at what that means for our decision making process. If everything is mostly equal, how are we choosing between them?

Niche features will swing deals

In the article I wrote last year, I made the case that both Citrix and VMware are basically equal for the vast majority of customers and use cases, and that the only features that set either apart are either platform-specific (like how "Integrates with NetScaler" can only apply for Citrix, even though they have it on their comparison page as a knock against VMware), or belong to an obscure niche that only select few customers can appreciate.

If everything that applies to 90% of the market is equal, those less-important, niche features could become significant. I don't think the features like "Integrates with NetScaler" are going to have much an impact, simply because there aren't going to be any situations where someone had a NetScaler first, but, for example, you may have a handful of Chromebooks in your organization, and though printing hasn't been a problem so far, you'd hate to learn later that the desktop virtualization platform you chose doesn't support it.

We're down to that type of decision!

It could be that those kinds of things will become really important, which is actually a nice problem to have.

My grandpa was a "Ford Guy"

I always remember my Grandpa having a Ford cargo van when I was a kid. I remember climbing in and thinking about how everything looked a little different, even though it was effectively the same thing as my family's Chevy cargo van. (Right down to the DIY shag carpet upholstery job all over the inside. These vans were from the 70's, after all!) Thinking it was strange that they were basically the same vehicle but had so many small differences, I asked my Dad why we had different vans. His response was simply, "Your Grandpa is a Ford guy," meaning he'd bought Ford his whole life, and that's just who he is.

Until he wasn’t. Eventually something Ford did made my Grandpa mad, so he bought a Dodge van (this time a full conversion van!) and became a "Dodge Guy."

This loyalty-until-you-make-me-mad approach will be a big factor in the future VMware vs Citrix world. Both companies will have to dedicate sales resources to picking up the unhappy users of the other company while also doing everything they can to keep their existing customers as customers. In the end, though, most VMware customers will be more inclined to buy VMware, and most Citrix customers will be inclined to buy Citrix. The goal for both companies is to have the most market share when this time comes.

Uncle Franken-wagen

Of course, there are alternatives. For example, I have an uncle whose yard is strewn with the carcasses of generations of Volkswagen cars. From the sky it might look like the tiniest junkyard ever, but to him it's a homemade parts store. He used to be aligned with one auto maker or another, but at some point he decided that he would sever ties with the big brand names altogether, and he settled on what was, at the time, a lesser-known brand without as many bells and whistles as the competition. He would maintain them himself, and would save all the old cars so that he could get parts more easily.

I think of this when I think of Parallels, Ericom, Workspot, Frame, and many more. It might take a lot to cut the cord from Citrix or VMware, but at some point if companies realize they don't care about some of the more nuanced desktop virtualization features, they too could simply decide to move to a simpler, cheaper platform. It might not be as well-known, and it might require a bit more work to keep running, but if there are fewer moving parts and it doesn't cost an arm and a leg, it might be worth it to make the move.

Let's face it, it will all come down to price

The reality of the situation is that we're on track for a race to the bottom, which occurs when all the main factors in a decision are even and the decision comes down to the one remaining thing vendors can control­–price.

On the surface, that seems great for your average company because it means desktop virtualization will be cheaper, at least from a licensing perspective. But when it ceases to be a revenue producer for the companies that make the software, it becomes less of a priority within those companies.

At the same time, the Tier 2 and Tier 3 platforms like Parallels, Ericom, Workspot, and Verde, not to mention the DaaS providers, will have had time to catch up on their feature sets, which will ultimately lead to more products with similar feature sets to choose from.

I need to do some historical research to see how well that's gone for other sectors of IT, but given the fact that I can't remember anything off the top of my head, I'm going to go ahead and say it's not great.

The Citrix/VMware EUC future

Now that we've got that out of the way, what does the future hold for Citrix and VMware, at least from an EUC perspective? Say the desktop virtualization is a wash, with niche features driving customers evenly to one platform or the other. Then what?

For one, you have mobility and workspace management. This is where I'm certain VMware is going to shine at VMworld. They have been doing more in this space than Citrix has, at least visibly, over the last few years, and have built up a nice head of steam. True, Citrix has put some effort into the workspace side, but it already feels like Citrix is playing catchup when it comes to Unified Endpoint Management. The most recent VDI Like a Pro survey suggests that Citrix and VMware are tied for EMM market share, too, but VMware is on the upswing while Citrix is on the way down.

VMware has indicated growth in EUC revenue that outpaces Citrix (though VMware doesn't break out their EUC numbers enough to compare them to Citrix's), and it's safe to assume that a lot of that comes from the mobility side. That is likely to continue as Citrix tries to find out what they want to be in the next phase of their life. Will they dump resources into UEM, EMM, and modern workspace management in addition to their stated goal of being a cloud-first, security analytics company? That's a lot of irons in the fire.

No matter what, though, from a desktop virtualization perspective, we appear to be quickly arriving at a time when the main decision you have to make will no longer be "Which platform is the best for my use case," but "Which platform can I get for the least amount of money," or "Which desktop virtualization platform comes with the non-desktop virtualization platform stuff that best suits our organization."

To dip back into cars once more, think of it like a modern gas station. When is the last time you picked a gas station to refuel at because of the type of gas it had? With all gas being more or less equal in quality and price, why do you choose the station you choose? Because it has a car wash, or a convenience store, or fresh pizza. It's not the gas at all, it's the other, adjacent amenities that seal the deal.

That's what we have to look forward to, and that's where EUC will get interesting.

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Cloud vendors and solutions like AWS Workspaces is the fastest growing segment. I'd not be surprised if MSFT buys something. Google will follow MSFT and the three cloud vendors will own 50% of the DaaS market in 3-4 years.

Citrix and VMware will not be able to match the prices offered by the cloud guys. Citrix will die because it stopped innovating and screwed it's partners. VMware's core business is done and from what I hear is losing all the talent to startups. 


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What about Microsoft?
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Indeed. "While two dogs are fighting for a bone, a third runs away with it."
Microsoft is the only one innovating at the moment and their solutions al allready cheaper.
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al=are
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A valid point, but I was coming from the perspective of "products that build upon RDS." There's no reason MS couldn't overtake them, too, though you'd think if they wanted to do that they'd have done so already.
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