IGEL sees partnership around Microsoft WVD as last mile in road to thin client leadership

At IGEL’s Disrupt in Nashville, the company announced that their native Linux client support for Microsoft Windows Virtual Desktop is now generally available.

IGEL’s Jed Ayres (L) and Dan Kalaf of Centene at DISRUPT

NASHVILLE – The headline announcement at the third IGEL Disrupt here was the  General Availability of IGEL’s Linux client support for Microsoft Windows Virtual Desktop [WVD]. Announced at the Microsoft Ignite event last fall, the IGEL partnership creates the first Linux-based client validated for Microsoft WVD. IGEL sees the announcement as critical in further driving their momentum, towards what they hope will be leadership in the thin client space – this year.

When Jed Ayres was appointed as President and CEO of IGEL North America in early 2016, the German-based company had a presence in North America, but not a large one. They were the seventh-ranked company in a thin client market where Dell and HP dominated, and the other players had very minor share. IGEL has posted significant growth since then, and sees the new partnership with Microsoft as driving them to the top in very short order.

“This small little German company is square in the middle of a major shift in how billions of people compute,” Ayres, now IGEL’s co-CEO, declared during his opening keynote at Disrupt.

IGEL makes a secure Linux-based system that can be put on any x86 device. While they started out as a hardware player, like the rest of the market, they transitioned to an emphasis on software. Of their 749,000 seats, up from 303,000 in 2016, half a million are software, and the bias towards software is much stronger in North America compared to the legacy base in Europe.

“When I started we were  number seven in the US,” Ayres stated. “We are now number 3 and we will become the number one player in this space in 2020, and sell a million seats.”

“The reason why IGEL has doubled in size is a software story,” Ayres said. “We are an operating system with a management tool connected to it. We also monetize completely different from the hardware vendors. The margin on that is completely different.”

Ayres emphasized that with the growth in importance of the edge and the cloud, this market is also very important to Dell and HP, but that they are still hardware products in what has become a software market.

“This is not a hardware game,” he stressed. “Their thin clients are a box. They talk about the boxes being more powerful, and smaller, and about better speeds, feeds and ports. Very large customers have moved to IGEL because we are kicking holes in planned obsolescence around hardware. With the Dell D10D thin client, to upgrade to the new version of ThinOS, customers need to replace the devices, long before their seven-year lifespan ends. Some enterprises have thousands of them. We can help them get that whole seven or eight years out of their devices.”

Ayres noted that one customer, a Texas hospital, saved $3 million on a 15,000 seat deal by using the IGEL OS on existing hardware instead of buying new Windows10 devices. At Disrupt, Dan Kalaf, IT Director at Centene, which manages government sponsored health care, joined Ayres to talk about the benefits of their deployment of 30,000 IGEL devices.

“It is easy to support, easy to use, secure. and provides that rich media experience that we need for our users,” Kalaf said.

Ayres said that while these forces would have propelled IGEL to thin client leadership in any event, the Microsoft partnership will speed it up significantly. The two companies signed a collaboration agreement in March, it was announced at Microsoft Ignite in November, and now native support for Windows Virtual Desktop within IGEL OS has reached General Availability.

“Without Microsoft, It would have been a much longer road,” he said. “The historical problems with VDI have been cost, connectivity and complexity. Now that Microsoft has invested in it, they have elevated it to a place where it is no longer a last resort, and you have 60,000 sales reps at Microsoft who get paid on ACR – Azure Consumed Revenues. You can imagine the liftoff, with enormous uptake in the three months since it was announced. 128 of the Fortune 500 are testing it.”

Ayres stressed that while Azure now drives the value of Microsoft stock, Windows in the cloud is the next step beyond Office that they can fully monetize there, and that WVD is the key to that.

“The era of fat clients as the favored way to consume Windows is over, although the world may not comprehend that right now,” he said. He noted that Gartner had studied the reasons for the quick adoption of Office 365 and concluded it was because of Microsoft enterprise licensing incentives that penalize for running on prem, and because the on-prem features deliberately became inferior to the cloud. The same thing will happen around WVD.

“People are still so undereducated on what WVD is, and many don’t see this, but  Microsoft will make it extraordinarily painful to consume Windows any other way,” Ayres stressed. “You used to have a couple releases a year from Microsoft. Now literally overnight they innovate on this stack of technology. The speed at which they are working on this is unprecedented.”

“It’s hard to be disruptive in isolation,” said Scott Manchester, Group Program Manager for Windows Virtual Desktop and Remote Desktop Services at Microsoft. “IGEL is a canonical partnership for us.”