For several years, thin-client PCs, along with their PC blade cousins, were considered a niche market segment.
They were mainly relegated to call centers for temporary workers and lacked the graphics ability and IT infrastructure to support demanding desktop operating systems and applications.
The only top tier vendor that continued to engineer and sell PC blades and thin clients in this climate was Hewlett-Packard, which competed against two smaller companies—Wyse Technology and Neoware. Earlier this year, that market shifted for good after HP bought Neoware for $214 million, a deal that closed earlier this month.
Beyond combining two of the largest thin-client PC vendors, the deal provides an opportunity for HP to build on Neowares client and virtualization software to create a new centralized computing product that can provide an enterprise with a virtualized desktop environment that offers the same qualities as traditional desktops.
The question remains: If HP builds it, who will buy it?
The arguments for enterprises investing in a centralized, virtualized computing model include better security—since the operating system and applications are stored within the data center, making it less likely that a virus can infect a desktop or that someone could walk out of the office with important corporate data—and an easier way to manage hundreds of individual PCs.
The problem with centralized thin-client computing, said Bob ODonnell, an analyst with IDC, is that it continues to be a hard sell to IT managers, although the HP brand has more appeal than either the Neoware or Wyse name.
“One of the big challenges that you face when youre talking about virtual clients is that you are moving a big part of the desktop control into the data center,” ODonnell said. “There are a lot of challenges here. There are psychological challenges and philosophical choice of which person in the IT department will maintain control. Theres also a list of technical and structural problems.”
But Bill Bredbenner, the current chief technology officer of Neoware, said that the deal brings together all the essential technologies for effective centralized computing.
“Part of the beauty of the acquisition is that it bolsters and truly completes the whole portfolio, whether its PC blades, workstations, thin clients or a centralized computing environment,” Bredbenner said.
“Pretty much the target audience is any enterprise out there looking for a centralized and secure computing solution. Theres been a lot of interest with government agencies, education and health care.”
Neither Neoware nor HP are talking about how or when HP will integrate the Neoware products, especially the software, into its portfolio.
However, during a call right after the acquisition was announced, Kevin Frost, vice president for HP business desktops, said the companys investment in centralized computing would “accelerate,” which could include additional acquisitions.
Lou Donofrio, vice president of marketing for Neoware, said the skepticism can be overcome and he pointed to IDCs own projections that the thin-client market will continue to grow by about 20 percent annually.
Desktops, by comparison, are expected to grow by about 4 percent, which shows that enterprises are interested in this type of computing as long as HP and Neoware can deliver on the infrastructure. (Even if thin clients reach 7.4 million shipment by 2011, these PCs will be only a small part of the more than 360 million worldwide PC shipments IDC projected for that year.)
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“I think a lot depends on the type of organization, but we are in an industry that changes all the time and companies are open to this type of change,” Donofrio said. “If you look at the security, the cost savings, the energy savings, I dont think this can be stopped.”
The one area where ODonnell sees HP making the biggest change is integrating Neowares image managing and OS streaming software into the Palo Alto, Calif., companys own CCI (Consolidated Client Infrastructure) software. In addition, HP servers support both VMwares VDI (Virtual Desktop Infrastructure) and Microsoft Virtual Server.
Like a traditional server-based virtual environment, virtualized client computing divides the hosts physical resources—memory, storage, microprocessors—into multiple virtual machines and each of these VMs are able to support operating systems and applications, all connected through a companys network.
Unlike traditional thin-client computing, the virtualized computing model offers an enterprises employees a virtual PC that is complete with hardware resources, while offering the IT department control through the network for tasks such as patching and upgrades for operating systems and applications.
The result, ODonnell said, is a group of servers housed within the data center that control different images for different departments—human resources, manufacturing, office workers—and the OS and applications are streamed to the proper thin client, workstation, PC blade or even a traditional HP desktop.
If it seems familiar, its because it is.
On Oct. 10, Dell introduced a “streaming” centralized computing model that combines standard OptiPlex desktops—the hard disk drives are removed—with PowerEdge servers and storage along with OS streaming software from Citrix. This particular package, however, does not include virtualization within the servers, but each server can hold up to 100 desktop images.
About two years ago, IBM offered its own Virtualized Hosted Client Infrastructure, by partnering with both Citrix and VMware, which looks to get greater use of virtualization as well as an expansion of IBMs blade form factors.
Wyse also offers a similar software suite that allows the OS to be streamed and the software also works with VMwares VDI, Microsoft and Citrix. The difference comes down to services. HP, and to an extent Dell, can deliver services while a smaller player, such as Wyse, has to partner to provide services.
By providing services, companies like Dell and HP, along with some other models being promoted by NEC and IBM, eliminate a obstacle, but ODonnell insists there is not an easy way for IT departments to remove a trusted standard, such as a locally managed desktop, to replace it with the type of virtualized client infrastructure promoted by HP and other vendors.
“Again, this is not a greenfield,” ODonnell said. “People already have something there and a lot depends on how hard or easy it is to convert one type of environment into a new type of environment.”