This blog entry was written by Rob Hammersmith, a Citrix sales engineer in the US central region. He wrote it in response to some blog items I posted over the past few weeks. Rob allowed me to post it here as long as I made it clear that these are his personal thoughts and not the official line from Citrix.
Recently Brian Madden posted a couple of articles on his website regarding the pricing of XenDesktop in regards to the pricing of XenApp. In the most recent article he states, "Too bad the CXOs of the world are going to read that XenDesktop is the 'cheap' way to XenApp and want to deploy it for all their users immediately."
Well the CXOs of the world are going to read that XenDesktop is the 'cheap' way to XenApp BECAUSE Brian keeps writing it. But just because Brian keeps writing it doesn't mean it's true.
For a fraction of customers it is true, but for most customers it's not. In fact, some customers could end up paying two to three times much just in licensing costs alone just to do XenDesktop in lieu of XenApp, despite a concurrent XenDesktop license being cheaper than a concurrent XenApp license.
Why? Because you can't build a XenDesktop solution (nor a XenApp solution for that matter), without paying Microsoft and hardware vendors in addition to Citrix. While Citrix charges less to do XenDesktop than XenApp for the customer to actually do XenDesktop rather than XenApp, it could costs significantly more overall.
I'm not going to go into the increased hardware costs for XenDesktop, as that's already been hashed out in previous responses to Brian's articles. What hasn't been discussed much is how much Microsoft makes in a XenDesktop solution (or any VDI or Blade PC solution for that matter).
We're all familiar with how Microsoft makes money in a Terminal Server solution. For every Terminal Server you stand up, you pay Microsoft for a Windows Server license. For every client (or user) that connects, you pay Microsoft for a TS CAL. Simple enough.
But with XenDesktop, people assume it works the same as a licensing a TS solution. It's doesn't. Sure, the VECD looks like an equivalent to a TS CAL. And at $23 MSRP, that's a lot cheaper than a $119 TS CAL. One could look at that and say, "if I have 300 clients, Microsoft gets $6900 ($23 x 300) if I choose XenDesktop and $35,700 ($119 x 300) if I choose XenApp. XenDesktop is a no brainer, right?"
Not so fast. You have to remember that both a TS CAL and a VECD are just a license to remotely connect to a licensed operating system—they don't actually license the operating system. For TS, the license for the operating system is done by buying Windows 2003 and installing it on the server. If I need a second TS because I want to load balance those 300 users across two servers, I have to buy a second Windows 2003 server license, (and so on and so on). So for 300 users I'm looking at 300 TS CALs and a few Windows 2003 server licenses.
But in XenDesktop—and any VDI, blade PC, or remote single-user Windows solution out there—the operating system still needs to be licensed. But it's not like TS where one operating system license is installed on a server that's shared via a pool of TS CALs that client devices check out as they connect. Microsoft ties VECD Software Assurance (SA), which is tied to a Vista OS, which is tied to a client device. That means for those 300 users to be licensed by Microsoft for XenDesktop, Vista Enterprise has to be purchased 300 times. And then with 300 upgrades to SA, I'm eligible to buy those 300 VECDs (assuming you're in the right Microsoft open licensing agreement to get Vista Enterprise, which is the only edition of Vista where VECD is available).
So with XenApp, I buy 300 TS CALs and a few Windows 2003 server licenses. But with XenDesktop I buy 300 Vista licenses, 300 upgrades to SA, and 300 VECD licenses.
Now a good argument can be said that some customers are already there, as all their clients may already be licensed for Vista. But the differences don't stop with the initial purchase. They keep going.
In a TS environment, both the server OS license and the TS CALs are one time purchases. I can use the solution as long as I want. That's not true with VECD. If the SA and VECD are not renewed annually, then that client is no longer licensed for remote connections to Vista (or XP). So even customers who already have Vista licenses for all their clients will eventually eat up all the savings XenDesktop provided over XenApp in year one through required Microsoft annual renewals (Citrix has SA renewals too, but they're optional, and the cost of Citrix SA is the same percentage with either XenDesktop or XenApp).
Now Microsoft does have another option, which is the VECD for thin clients. With that all the client needs is the VECD (no Vista purchase or SA upgrade necessary). But instead of $23, it's $110. So back to our scenario, if I have 300 clients, Microsoft gets $33,000 ($110 x 300) for XenDesktop and $35,700 ($119 X 300) for XenApp. XenDesktop is a no brainer again, right?
Wrong. This VECD for thin clients is annual too. Don't renew it, then don't ever connect with that thin client to Vista (or XP) again. After a few annual renewals of these VECDs for thin clients, the savings XenDesktop provided over XenApp in year one is again eaten up through required Microsoft renewals.
But wait, that's not all. What about the TS environments where the customer has assigned their TS CALs in "per user" mode, like if they have 100 users that have 300 devices they use to connect with? In that scenario, with TS I just need 100 TS CALs. But with XenDesktop I need 300 VECDs. There is no user mode licensing for VECD. Why? Because again, all the licenses (the Vista OS, the SA, the VECD) are to a specific devices. There's no way for Microsoft to tie it to a user (other than having a named user for the device that all the Microsoft licenses are tied to, but that's still a per device mode). Using XenDesktop in lieu of XenApp in this scenario is a money pit.
And of course there are those customers that look at this and say, "Well, I'll just avoid that whole mess and stick with doing VDI with Windows XP." Sorry, Microsoft doesn't allow that. Well, they do, but to be licensed for remote connections to Windows XP you still need the VECD license. And the only way to get that for the client device is to buy Vista Enterprise for the client device and upgrade it to SA. You can then use your "downgrade rights" to use that VECD as a license to remotely connect to Windows XP. So sticking with Windows XP and XenDesktop is not a way to avoid all of these Vista, SA, and VECD license costs.
Tthe bottom line is there are some customers who could likely save money for a few years choosing XenDesktop over XenApp. These are customers who already have all of their clients licensed for Vista with all of them are upgraded to SA, and doing XenDesktop (or any VDI, or Blade PC solution) is just an effort of adding an annual VECD cost to their environment. Now whether the money they save covers the additional hardware they need to do VDI over TS is another debate all together.
For those that need more than just a simple VECD purchase (because their Vista is not on SA, or they aren't licensed for Vista yet), odds are they will pay much more for XenDesktop over time than they will for XenApp, even if they happen to save money in the first year or two. Until Microsoft either releases the annual requirement on remote connections to Vista (and XP), or forces TS CALs into an annual subscription as well, this won't change.
Ultimately all of the comparisons above assume that XenDesktop or XenApp would fit the customer's needs. And if this is true, the customer would be better off using XenApp, as with ongoing licensing costs, and additional hardware needed, XenDesktop is more expensive. But if XenApp doesn't fit the customer's needs and XenDesktop does, then why even debate which one is cheaper? Just buy XenDesktop.