In-Depth

Startup: Desktone Places a Big Bet on DaaS

Desktop virtualization player goes against the big boys.

• By Tom Valovic
• 08/15/2008

One market researcher, IDC, is predicting the market for desktop virtualization software will grow to $1.7 billion by 2011. And while it's not a panacea for many of the operational issues that IT managers are now wrestling with, it's a solution that has the potential to make big inroads into the departmental challenges associated with security, cost and manageability.

One of the more interesting startups in an increasingly crowded field is Desktone Inc. What sets the company apart is its business model. Instead of anchoring an array of virtual machines in the enterprise data center, hosting takes place "in the cloud"-that is, on the premises of a services provider. The company refers to this as Desktop as a Service, or "DaaS."

"The traditional way that a vendor sells to a large enterprise is to say, 'Write us a check for several millions of dollars for some tools upfront and then go figure out how to save money in the future.' We don't think that's the right recipe." Paul Gaffney, COO, Desktone Inc.

With SaaS and cloud computing emerging as trends, Desktone's model may have strong appeal to services providers of all stripes. IT vendors can offer the service on a per-desktop pricing model, which would help enterprise customers shave total cost of ownership (TCO) for ongoing desktop support, now as much as $5,000 a year per desktop in many companies.

Even telecom carriers can get into the act. "The potential market is huge," says Rachel Chalmers, research director with The 451 Group. "No one knows whether this will be led by service providers or driven by the internal enterprise model, which is why Desktone is so interesting."

Avoiding Upfront Costs
Desktone claims to be the only company with a complete DaaS solution, arguing that subscriptions are the best approach, as opposed to hosting in the corporate data center. The gist of this argument centers on cost and complexity. Implementing hosted desktop virtualization in a company's own data center entails capital expenses such as new server and storage capacity.

Using a DaaS solution, Desktone COO Paul Gaffney says desktop TCO can be reduced by $300 to $800 per desktop per year. Gaffney also likes to point out that the upfront investment can be avoided with the approach they offer. "The traditional way that a vendor sells to a large enterprise is to say, 'Write us a check for several millions of dollars for some tools upfront and then go figure out how to save money in the future.' We don't think that's the right recipe."

Desktone's initial product is called Virtual-D and will become generally available in Q3 of this year. It has sold the product to beta customer Merrill Lynch & Co. Inc. Other companies evaluating it include Hewlett-Packard Co., IBM Corp. and Verizon Communications Inc., as well as some international telecom carriers. Verizon wouldn't offer details about when and if such a service might become available. Desktone also recently announced a partner program, with HP's Flexible Computing Services group signing on as the first member.

Desktone at a Glance
Location: Chelmsford, Mass.
Market: Hosted desktop virtualization
Employees: 60
Core Offerings: Virtual-D
Funding: Citrix Systems Inc., SoftBank Capital, others