This week's news that Dell will buy Wyse could mean big changes for the VDI thin client market, especially when it comes to Cisco, DevonIT and future acquisitions.
A few things to consider: How will the Dell/Wyse acquisition affect the thin client market landscape as it stands today? Could it be a harbinger of more acquisitions? If so, who could be involved?
Here's how I see it all panning out:
How Wyse Technology will boost Dell’s thin client offerings
Today, Hewlett-Packard and Wyse are the leaders in the thin client market by a wide margin, just like HP and Dell have been leaders in the PC and server space. The Dell/Wyse acquisition is a natural fit, because both HP and Dell now have equal enterprise offerings in the VDI thin client market -- as well as lots of flexibility as we gravitate toward a world where Windows doesn't live on the machine under your desk.
The fact that Wyse is going to a big PC manufacturer can only be a good thing.
People are already asking how Wyse could fit into the Dell thin client model, and from a high level, it should work out pretty well. Ordering from Wyse rarely involves getting stock terminals, especially for large orders, so Dell has the infrastructure to support even more custom VDI thin client builds.
The main concerns so far have been about Dell's ability to deliver a full thin client solution (images, management, etc.) as well as the boxes, but Dell should have no problem there, either. When HP bought Neoware in 2007, it didn't exactly jive with the company's PC model, but HP turned it into one of the top two products in the thin client market. So the fact that Wyse is going to a big PC manufacturer can only be a good thing.
What Dell/Wyse means for Cisco
There are two interesting aspects that could lead to a changing thin client market this year. The first is that Dell currently sells original equipment manufacturer versions of DevonIT thin clients. I assume that partnership will simply go away (if it hasn't already). Even though DevonIT still has a partnership with IBM, losing its relationship with Dell would have to change its cash flow. DevonIT has been oddly quiet the past few years, so maybe we'll see it selling directly to customers again, rather than relying on partnerships.
The other, potentially more significant aspect is that Cisco Systems' existing VDI thin client offerings that integrate voice and remote desktop access are based on Wyse technology. So far, no one has mentioned how this relationship will change, but I have to assume it will also dissolve. Cisco and Dell are competitors in many aspects of corporate IT, and I doubt Dell will be willing to share its newly acquired intellectual property with a competitor.
More on the Dell/Wyse acquisition:
Dell acquires Wyse for thin client offering, desktop virtualization
Dell plans to acquire Wyse
That means Cisco might be looking for a new dance partner. Who might be a good fit? I'm sure to leave some out, but off the top of my head, the list of possible companies includes DevonIT, ChipPC, 10zig, PanoLogic, nComputing and ThinLabs. (If you think you should be on the list, get in touch with me.) Of these, it's hard to pick who occupies third place. In sheer number of deployments, I think nComputing beats everyone, including HP and Dell/Wyse, but it's really up in the air at this point.
If I were Cisco and I was about to lose a critical part of my client offering because of the Dell/Wyse acquisition, I'd consider acquiring my own technology to prevent that from happening again. Of course, that means Cisco would have to be in the driver's seat when it comes to the thin client technology, so maybe they should just look to partner again.
Where the thin client market goes from here
In addition to Cisco, there's IBM and Lenovo. IBM, as mentioned earlier, has a partnership with DevonIT. Perhaps IBM, which isn't exactly a go-to player in the desktop virtualization and thin client market, is content with that (even though Dell wasn't). Lenovo's VDI thin client market share isn't anywhere close to HP's or Dell's, so I doubt they'd want to acquire a thin client company, but you never know. Sometimes these things set off a chain reaction.
Ultimately, a PC-oriented company, such as Dell, acquiring a thin client company speaks volumes about the future of thin clients. Dell is identifying an important trend: The future of Windows involves fewer devices running Windows in the cubicle as desktops and applications move to the Web, cloud and into the data center.
Acquiring Wyse technology -- including Cloud PC, Wyse Thin OS, its hardware design knowledge and management software -- puts Dell in a good position as changes in the thin client market start to take hold.
ABOUT THE AUTHOR:
Gabe Knuth is an independent industry analyst and blogger, known throughout the world as "the other guy" at BrianMadden.com. He has been in the application delivery space for over 12 years and has seen the industry evolve from the one-trick pony of terminal services to the application and desktop virtualization of today. Gabe's focus tends to lean more toward practical, real-world technology in the industry, essentially boiling off the hype and reducing solutions to their usefulness in today's corporate environments.