Can Citrix and VMware find a real business opportunity in IoT?

Rachel Berry gives us a closer look at the IoT technology and vendor landscape, then considers EUC vendor opportunities.

There’s no doubt that there’s a huge and growing market associated with the IoT (Internet of Things), and EUC vendors like Citrix and VMware have been making a lot of noise in this area. Shortly after Citrix acquired Octoblu back in December 2014, Gabe Knuth wrote that it really wasn’t clear how well IoT and EUC would align, or what exactly the opportunities would be for EUC/VDI vendors.

On paper, it sounds like a good match:

  • Both VMware and Citrix have done a lot to integrate mobile device management (MDM) with traditional enterprise deployments. Although we tend to think of solutions such as XenDesktop and Horizon as deploying graphical desktop VMs, typically in a large enterprise deployment, there is a vast range of clients and peripherals like thin clients, smartphones, NetScalers/gateways, and printers.
  • Conceptually, the IoT can be thought of as extending unified endpoint management (UEM) to the world of connected embedded devices.
  • EUC vendors are experienced with the challenges of endpoint updates and management.

So technology-wise, the EUC vendors would seem to be in a good place to enable the Internet of Things—but can they access the revenue opportunities of IoT?

Connecting embedded devices

EUC vendors’ experience is with managing end-points that run rich OSes such as Windows, Linux, Android, and iOS, but a large number of connected devices run real-time operating systems (RTOS), and they use a wide range of communication protocols. The chips in many end products (e.g. smart light bulbs, etc.) can cost only a few dollars or even cents, while EUC vendors traditionally manage expensive, high powered, and high-functioned devices.

The natural IoT integration point for an EUC vendor is via an IoT gateway. An IoT gateway is typically a device with a relatively expensive chipset or SoC, comparable to those found in laptops, smart phones, and Raspberry Pis, that can run a rich OS such as Linux or Android, etc. The IoT gateway acts as the connection and management point for individual IoT devices.

Both Citrix (via their Octoblu acquisition) and VMware have gateway offerings, and both have focused on APIs and SDKs that enable IoT device manufacturers to integrate the diverse and sometimes non-standardised protocols of IoT devices with their gateways. This type of development rapidly gets expensive to maintain and test, and doing it right long-term will be expensive, especially with draft legislation coming through for increased governmental regulation. EUC vendors are effectively taking on an entire new ecosystem of protocols and operating systems.

Who owns IoT endpoints and cares about their management

A large proportion of the IoT opportunity is consumer focused, for example, wearable fitness monitors, connected home thermostats, and the like. Many of these devices are simply connected by virtue of an app on the user’s device, or an OEM’s app in “the cloud.” Clearly, these consumers are not going to be looking to buy directly from Citrix or VMware.

EUC vendors do well in large enterprises and particularly in verticals such as healthcare, finance, and education. Potentially, some interesting use cases are mooted, particularly:

  • In “smart” workplaces, where security entry systems and office spaces are linked to EUC deployments.
  • In medicine, where medical data sensors, smart band-aids, and thermometers potentially could record a patients’ vital signs directly to medical records.

With potentially thousands of new end-points, there is certainly a market for these technologies, but again, whether EUC vendors are well-placed to gain significant revenue is questionable. One challenge is who is going to be motivated to unify their IoT and EUC infrastructure.

In a traditional VDI deployment, the infrastructure and end-points are the concern of a system administrator. The monitoring of the end-points, as well as the data they spew out regarding user experience, CPU usage, and frame rates, is of interest to the system administrator. In an IoT network, though, the data from the end-points is likely to be the concern and responsibility of completely different stake holders and parts of the business. In a “smart” office, the fingerprint readers, door locks, and meeting rooms are likely to fall under security and facilities. And it’s the doctors and healthcare professionals who are interested in the data from 10,000 smart band-aids.

Adding an IoT network via an IoT gateway to VDI infrastructure sounds complicated in terms of management. The smart workplace makes the most sense as it directly integrates and connects EUC elements to IoT devices—e.g. the fingerprint reader means your desktop appears when you enter the room or follows you around multiple terminals. In big corporate headquarters this could well be a vision; however, a large slice of the VDI/apps market is in customers with 500 or 1000 seats of XenApp or similar. These are companies based in rented branch offices whose main business is not tech, and have limited IT support. With the current uncertainty about regulatory liability, I just can’t see many companies rushing to connect everything. Especially after recent denial of service and malware attacks, the benefits versus the risks don’t seem to add up yet.

How about Industrial IoT and connected cars? Industrial IoT (IIoT) is a very specialist and expensive area to get into. Connected cars, transport, nuclear power, and utilities are already governed by Functional Safety (FuSa) legislation. Large industrial OEMs and hardware vendors such as Siemens, Hitachi and Intel all have invested heavily in IIoT. The processes and investments needed to break into FuSa-driven IoT mean that it’s unlikely there is a place for an EUC vendors alone, and that they will be reliant on IIoT vendor partnerships. I doubt we’ll see more technical involvement or FuSa development other than vague statements such as “IoT has huge potential for connected cars and industry,” and partnership announcements such as VMware’s recent Samsung announcement.

IoT is also following the industry trend for generating revenue from software and services rather than raw hardware, so this is another reason why it’s hard to see an easy or significant route to revenue for the EUC vendors.

A Crowded Market

There’s a lot of competition for the revenues of IoT management, with IoT platforms and tools popping up from traditional embedded hardware ecosystems and system integrators. For example, we have:

The Plausible Opportunities

Returning to the thought that EUC vendors do have a wealth of expertise in the raw technologies, we still have the issue that a lot of protocol development and testing is needed. It seems the best opportunity for EUC vendors to access IoT revenues is for their technologies to be licensed or promoted by OEMs, cloud providers, or gateway manufacturers as a faster route to market. The challenge will be that many of those OEMs are wanting to do exactly the same thing as the EUC vendors—they want to access the revenues and visibility associated with the management and monitoring on their own.

Both Citrix and VMware have partnered with many of the big names in IoT platforms and gateways, but how motivated those vendors are to bring EUC vendors into the mix is questionable. While EUC vendor sites promote these partnerships, the IoT brands seem more focused on promoting themselves.

Citrix has a history of adventurous acquisitions targeted at expanding their markets, and they made moves to the smart workplace with GoToMeeting, with many early IoT demos involved linking conferencing rooms and systems. But now with Citrix spinning off GTM to LogMeIn, the message seems more confused.

VMware’s entry into the IoT market is perhaps more interesting, as VMware have always been quite measured and conservative, focusing on their core customers who they know extremely well. VMware’s Pulse IoT Center seems to be a plausible “end-to-end” solution, VMware having taken their expertise in end-point management to produce a more comprehensive product.

Allowing a few IoT Gateways to be added to a desktop virtualization infrastructure doesn’t seem likely to generate significant additional revenues, but perhaps IoT gateway integration could become a must have feature for certain customers—one that doesn’t generate revenues, per se, but one that is necessary to maintain presence and mindshare.

The success of EUC vendors will depend on how many IoT device vendors decide to offload management and monitoring to them and invest in integration against the IoT Gateway SDKs, rather than do it themselves or using another third-party.

It’s still too early

It’s been two to three years since IoT started showing up in cool eye-catching demos, but trawling the vast case study databases of both Citrix and VMware, there seems to be little evidence of significant uptake or implementation; there have been no big headline customers on stage in keynotes, either. However, with most recent analyst reports showing large scale uptake of IoT has been minimal and slower than predicted, perhaps the opportunities for the EUC vendors are yet to come. Or, perhaps it will come down to IoT gateway management and support being one of those features some customers need and expect, but that doesn’t generate revenue in its own right, similar to the support for print server management that Citrix and VMware provide.

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