Take 2: VDI for the ASP Market

Introduction Application Service Providers(ASPs) provide customers with a hosted application solution.Although many may have thought that the ASP market died in 2001, it has managed to hang in there and is surviving if not thriving in some cases.




Application Service Providers  (ASPs) provide customers with a hosted application solution.  Although many may have thought that the ASP market died in 2001, it has managed to hang in there and is surviving if not thriving in some cases.  I have worked with three of them in the last year alone.  Often, these folks have settled on a niche for servicing smaller companies.  Their customers tend to be totally focused on a non-technical business that needs to use some computer technology.  As a result, these customers tend to have less than one full time IP person and do not want to hire one.  So the ASP makes an attractive solution to those kind of customers because they have IT professionals to ensure that the aspects of IT administration (picking the right software, applying best practices on IT administration, ensuring backups happen) are applied to their company.  Ultimately, it is the sharing of the professional IT staff that makes the ASP attractive to the customer.


ASP Today


To be cost effective these ASPs today use Citrix and/or native Terminal Services (TS) so that the hardware and operating system can also be shared. The customer uses a PC on their site and remotely accesses their hosted desktop using the RDP or ICA protocols.  The hosted site, in addition to the hosted desktop provides the applications as well as back-end file stores and databases.   Microsoft also helps enable this market with attractive pricing (Server Provider Licensing Agreement) for things like hosted Office and exchange. 


Complicating the setup is the need to ensure complete security to prevent any possible cross-customer data breech.  Active Directory (AD) is used within the hosting site, even if not in use at the customer site.  The tendency is for the ASP to build a single domain and create an  Organizational Unit for each customer. The ASP often has to add in Application Virtualization to eliminate application conflict.  These application conflicts may be due to application-TS issues (apps that are designed for the single user desktop), application interference (for example dll version conflicts between two applications), or, or Multi-tenancy issues.  


That last one, multi-tenancy, means application issues that arise when you want to host more than one company on the same terminal server.  For example, each customer might use Quick Books and each need to be able to see only their data.  The same goes for SQL or Oracle based applications.


ASP Tomorrow?


I am wondering if a Virtual Desktop Infrastructure (VDI) based approach might also emerge as a solution for this space.  A VDI based solution would use Virtual Machine technology to host a virtual windows image for each user within the customer. To keep things simple and offer the customer a best quality user experience, I imagine that these these windows instances may be personalized by the end user, however they won't be administrators on the windows instance.  The ASP is responsible for maintaining the image and applications so letting the user try to install whatever they want would be a really bad idea.


Using an approach of pooled standard images that are less customizable might be an option, but it wouldn't make much sense to me.  To start with, the ASP would need to build a custom image per customer, with that customers installed applications and configured to the customers back-end resources.  Starting with such an image and then cloning to private images per user within the customer would not be much more work, and yet would vastly improve the user experience.


I can imagine that the existing ASP could offer the customer either option.  In offering both options to the customer, they would be offering either a shared hosted desktop experience, or an individual hosted desktop experience. The VDI desktop should probably be priced at a premium by the customer when compared to a Terminal Server based desktop due to the improved (perceived?) user experience.


From the ASP perspective providing both options , VDI has mostly increased costs for VDI.  Each VDI instance needs a client OS, rather than sharing the TS OS.  Scalability per the hardware will also be lower for VDI.  I have heard other experts on this give factors for this scalability of anywhere from 2.5x1 to 10x1 (meaning that for the same hardware, or at least hardware dollars, you can host N users via Terminal Services for every one user that you could support using VDI).  Additional options like OS streaming and disk differencing might seem attractive as well, but not if they add to the infrastructure costs or make things more complicated.


On the flip side, the ASP should have a much simpler infrastructure with VDI.  For example, Application Virtualization may not be needed for these customers via VDI as all application-TS issues and multi-tenancy issues go away, and the likelihood of multi-application conflicts are greatly reduced.  Even given the extra costs involved, VDI may look very attractive to the ASP because they can implement a considerably simpler solution.  This simplification may lead to ASPs that offer only the VDI solution and dropping TS as an option.


Concluding Thoughts


A VDI based ASP solution might increase the potential customer base for ASPs, but probably not by much.  Until ASPs create a compelling case for companies with IT staff to use their services the market will remain limited.  VDI by itself probably does not make that compelling case.


Join the conversation


Send me notifications when other members comment.

Please create a username to comment.

Isn't this in essence what DeskTone is doing (http://www.desktone.com/)



Yes, but no?  Although I might know one or two of them, I have not really focused in on them yet since they are not yet running as far as I know  (Although now that I look I see they have an announcement this morning).  This posting was based on what I have been seeing elsewhere.  So maybe a partial validation for them. 


Looking at their site alone, it seems to me that you are correct in that Desktone is doing ASP via VDI, which they call "Desktop As A Service" (DaaS).  My impression of Desktone, however, is a company aiming at the higher end of the enterprise market.  A risky gamble, no doubt.  They will need volume to make their model work, which is a lesson that the smaller existing ASPs have learned to avoid. 


The existing ASP players provide a personal "IT technician" with a professional service, and I feel a sense of Desktone selling technology and a new way of doing things.  But maybe I'm wrong about them.  I'll have to check them out at MMS in a couple of weeks.


Not quite the same but I am seeing outsourcers doing just what you describe - deploying and  manaaging VDI images hosted within their customers. Not ASP as we normally think of it but the same thing as part of a larger whole.



"Desktone appoaches the VDI market in a new way: instead of offering a connection broker like most competitors in the space, the startup targets service providers with an architecture that it's designed to resell hosted desktops."



My company,VCIT Consulting, provides small businesses with a hosted, fully managed "virtual office" solution. We use a virtual VMware infrastructure upon which we layer Citrix SBC published apps that we make available via branded Citrix web interface portals or via the PNAgent (customer choice).

Our solution isn't without technical challenges, but it does provide excellent user density, centralized management, and all the benefits of a virtual infrastructure.

We are in the process of evaluating XenDesktop Beta as a possible platform for providing VDI instances. However, I'm still not convinced of the business merits of VDI for an ASP. Providing this type of solution at an attractive price point is going to be a significant challenge given the additional infrastructure required.

I'm also not convinced that the average user is going to see significant benefits of connecting to a VDI instance compared to a published SBC desktop. The reality is that a managed desktop - whether VDI or SBC - is likely to be locked down to prevent end-user software installations, certain customizations, and changes to system settings. However, I know that VDI is attracting a lot of attention just now, which is why we are looking at it.

Component technologies like Provisioning Server, Thinstall, SoftGrid, etc will help to mitigate some of the additional costs associated with VDI (i.e. storage and application management issues). However, user density suffers hugely when implementing a VDI infrastructure in comparison to SBC and so far nothing has emerged from the vendors to close that gap. I think more mileage can be gained from using application virtualization technology to deliver on-demand applications to a generic, identically configured SBC server farm.

Whether using VDI or SBC, there are more commonalities than distinguishing factors between these technologies. Both rely on remote connection protocols like ICA and RDP that have shortcomings (i.e. multimedia). Both have some shortcomings in peripheral connectivity. Neither has a solution yet for offline access.

Yet despite these shortcomings, the benefits out-weigh by far the traditional distributed, break-fix type workstation centric infrastructure that is hurting productivity and impacting the bottom line for so many companies.

The great thing about the ASP model is that it provides a tremendous incentive for the provider to be efficient, provide exceptional service, and provide reliable systems as the more time spent resolving issues, the less profit is made.

Traditional break-fix providers have no such incentive - the more hours they bill, the more money they make.

As a consumer, which would you prefer :-)


I agree.  Well put.

Brianos (forgot to login)