ClearCube Spins Off Software Division

ClearCube, which has specialized in PC blade hardware and management tools, is spinning off its software division into a separate entity with the hope of cashing in on the emerging virtual desktop market.

The new company, called VDIworks, headquartered in Austin, Texas, will focus on creating desktop virtualization management software under the product name Virtual Desktop Platform.

ClearCube will continue to sell its PC blade hardware, its thin-client PCs and its Sentral management software. Earlier in 2008, ClearCube announced that it would begin selling Sentral separately from its hardware for the first time.

The two companies have an OEM agreement in place that will ensure that VDIworks' software, including the Sentral management software, continues to work with ClearCube hardware. ClearCube and VDIworks will also continue to share the same owners and investors. ClearCube Chief Operating Officer Randy Printz will take over as president and CEO, while Rick Hoffman, previously president of ClearCube, will move over to VDIworks and serve as that company's president..

While still in its early phases, desktop virtualization and centralized management of a corporate PC fleet has attracted the attention of industry heavyweights such as VMware, Microsoft and Citrix Systems as well as a host of smaller companies that offer a range of different features and management tools for controlling these environments.

However, creating an environment for desktop virtualization is an expensive undertaking and no single company has come to dominate the market at this point. In an interview, Hoffman said he believes many enterprises will begin seriously considering the technology in 2009.

"Right now this is a very nascent space and you have some people out there running proof-of-concept tests but there's not a lot of people taking advantage of virtualization of the desktop," Hoffman said. "For a company like ClearCube, you have a company that will now have the sole focus on delivering the physical and virtual management tools needed for that environment."

Rob Enderle, principal analyst of the Enderle Group, said splitting ClearCube into two gives the two businesses a chance to take advantage of their individual strengths in the market.

For ClearCube, the deal allows it to separate its PC blade hardware from the software, which should strengthen its relationship with VMware, Citrix and Microsoft in the rush to produce management tools for controlling a centralized desktop environment based in the data center.

As for VDIworks, the deal gives the new company a chance to work with hardware vendors such Dell, Hewlett-Packard and IBM to provide desktop management tools that work with a different array of hypervisors—the software that makes virtualization possible. This means the customer can have a choice of VMware's ESX hypervisor or the upcoming Hyper-V from Microsoft.

"By separating the software and the hardware, it allows the company to go places that it couldn't go before," Enderle said. "Dell is not going to work with a company that is selling hardware."

The move might also make one or both companies more attractive as an acquisition target.

The drawback is that neither of the companies yet creates enough new business on its own to keep it financially sound. In addition, the market does not seem ready to embrace a full desktop virtualization environment at present, which could create problems for both companies as they start out on their different paths.