Despite '09 economy, Gartner says Global hosted virtual desktop market to surpass $65 billion in 2013

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With market total today at $1.5B, we are looking at an HVD boom

April, 2009
By Liam Lahey

The worldwide hosted virtual desktop (HVD) market will accelerate through 2013 to reach 49 million units, up from more than 500,000 units in 2009, according to Gartner Inc. Worldwide HVD revenue will grow from about $1.3 billion to $1.5 billion in 2009, which is less than 1 percent of the worldwide professional PC market, to $65.7 billion in 2013, which will be equal to more than 40 percent of the worldwide professional PC market.

The IT consultancy said HVDs would have a major impact on the PC industry as enterprises that previously purchased high volumes of PCs on a regular basis would now look to replace them with less-expensive devices and replace them less frequently.

"PC vendors must prepare for the growth in demand for this client computing architecture by adjusting sales strategies and compensation models or they risk losing expenditure share with enterprise customers," said Annette Jump, research director at Gartner. "Distributed computing has been the dominant client computing architecture for the past 15 to 20 years, but a number of changes in the way users can access applications and client computing capabilities are bringing a number of alternative architectures to the fore."

"Hosted virtual desktops are currently the most visible of these alternative architectures and HVD adoption is likely to be rapid during the next three to five years, particularly in mature markets where existing data center and network infrastructures will be used to offset the cost of entry," said Brian Gammage, vice president and Gartner fellow.

The Gartner report, "Emerging Technology Analysis: Hosted Virtual Desktops, also stated while PC hardware expenditures would fall, enterprises would require more servers, network bandwidth and software to support new architectures.

Gartner estimated that approximately 15 percent of current worldwide traditional professional desktop PCs would migrate to HVDs by 2014, equal to about 66 million connected devices. The U.S. would reach double that of the worldwide average with over 18 million connected devices. After an initial slow start, the HVD market would rally in 2010 and 2011.

"Despite the further improvements in performance and manageability that are expected of HVDs in 2009, the current economic downturn is expected to inhibit the adoption of HVDs in the short term because HVD deployments require large upfront investments in server and network infrastructure," Jump said. "Because of IT budget cuts, we expect many planned HVD implementations to be delayed from 2009 into 2010 and 2011."

The current players in the HVD market come mainly from thin-client and virtualization IT areas. The largest PC vendors currently do not offer HVDs; however, some of them, such as HP and Dell, are looking to expand their presence in the segment beyond acting as hardware OEMs. Gartner said the HVD market would be heavily influenced by market leader VMware through 2012 and it also predicted Microsoft would become a HVD supplier in the next 18 to 24 months through its partnership with Citrix, which has the ability to offer a growing number of HVD components.

Jump advised PC vendors looking to maintain their share in the professional desktop market to become solution providers and understand that the HVD solution goes beyond hardware sales. She said that to become a HVD supplier, PC vendors need to offer multiple components such as server virtualization software to host desktop software, session management software to connect users with their desktop environment and tools for managing the provision of virtual desktops.

"HVDs are part of a bigger shift in client computing from traditional thick-client distributed PCs toward more manageable, secure and centralized client computing environments among many large and midsize companies," Gammage said. "To benefit from this shift, PC vendors don't need to create or even own all the components themselves, but they do need to be able to sell solutions and not just a 'bag of bits'."

Gartner analysts said once PC vendors have the HVD solutions in place, they need to ensure that their direct sales force is fully briefed about HVD technology and the difference in value propositions versus traditional desktop PC sales as HVDs may not ultimately be appropriate for all business applications and/or users.

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