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4/20/2020 Gartner Reprint

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Market Guide for Desktop as a Service


Published 6 November 2019 - ID G00368228 - 20 min read

By Analysts Nathan Hill, Michael Silver

Desktop as a service is a desktop delivery model that is maintaining high levels of hype with
Microsoft’s entry into the market. I&O leaders will find that they can move specific use cases
to DaaS, but cost and organizational cloud readiness are issues preventing broader adoption.

Overview
Key Findings
■ Microsoft’s entry into the desktop as a service (DaaS) market has dominated Gartner inquiries
since September 2018 and rejuvenated interest in DaaS maturity and business value.

■ DaaS has been successful for small organizations and is now being adopted by midsize and
large enterprise organizations, primarily for disaster recovery, and elastic and temporary use
cases.

■ DaaS offerings can vary significantly in scope of service, ease of adoption and cost, and will
become more viable as organizations move more workloads and applications to the cloud.

Recommendations
I&O leaders responsible for mobile and endpoint computing strategies should:

■ Create a decision framework to determine DaaS suitability across different use cases, such as
seasonal workers, contractor provisioning and disaster recovery, and expand to longer-term use
cases including contact center and remote worker provisioning as total cost of ownership
(TCO) improves.

■ Prioritize user requirements that are critical to DaaS adoption, such as performance levels and
user experience — rather than focusing on cost alone — to improve the odds of success with
your DaaS initiative.

■ Use DaaS to improve service levels or user experience in situations where their organization is
currently running virtual desktop infrastructure (VDI) on-premises or where they’ve tried VDI and
failed.

Strategic Planning Assumptions


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By 2023, price reductions and product maturity will lead organizations to move 20% of VDI users
into DaaS offerings in the cloud.

Through at least 2021, more than 70% of production Microsoft Windows Virtual Desktop (WVD)
usage will include use of third-party tools at additional cost.

Market Definition
This document was revised on 8 November 2019. The document you are viewing is the corrected
version. For more information, see the  Corrections page on gartner.com.

DaaS is a service offering that provides users with an on-demand, virtualized desktop experience
delivered from a remotely hosted location. It includes provisioning, patching and maintenance of
the management plane and resources to host workloads (see Note 2). Figure 1 shows the
differences between DaaS and other approaches, including VDI. It covers minimum services, but
many providers include other services in both their base and optional offerings. (Additional
services are described in the Service Scope section of the Market Analysis section.)

Figure 1. DaaS Service Components and Typical Areas of Responsibility Contrasted With Other
Approaches

The reality is that DaaS management is rarely binary — rarely does the customer or the vendor
manage everything. Thus, the statement of work and contractual agreement are still relevant in
the DaaS age; even though many DaaS offerings promise simple turnkey solutions, they may be
on the vendor’s terms and too restrictive.

Market Description
The set of components included in DaaS offerings vary and often include services beyond what’s
in the minimum required DaaS definition. There is often flexibility for the customer to select
additional services. Product or component switching options are designed so organizations do
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environment (e.g., endpoint protection platforms, monitoring tools and OS licensing [see Note 3]).
The downside to this flexibility is that the DaaS system will no longer be turnkey.

The desktop delivery components of DaaS can be broken out into more detail:

■ Proprietary DaaS solutions — These are offerings created by a provider and only available from
it. Amazon WorkSpaces is the most well-known example where you can only get WorkSpaces
on Amazon Web Services (AWS). Amazon’s WorkSpaces offering has been in the market for
more than five years and has evolved significantly in that time. Workspot is another vendor that
provides its own cloud-native solution, where it delivers the desktop at a flat fixed fee, which
includes the cloud compute costs. Its preferred deployment method is on Microsoft Azure,
although it is not tied to it. Microsoft is the latest entry to this category with Windows Virtual
Desktop (see Note 4). Microsoft has fostered partnerships with vendors to extend and enhance
its service with a plan to enhance native capabilities over time. It would be more difficult for
customers to move off a vendor that uses proprietary software if they were dissatisfied with
the service.

■ Citrix- or VMware-based DaaS offerings — The two leading VDI vendors offer cloud tooling
solutions used by many DaaS vendors to create their offerings. Organizations as well as
service providers can also leverage these vendors’ cloud tooling offerings to create VDI, DaaS
or hybrid DaaS solutions. These solutions allow the service provider or customer to decide to
run on its choice of clouds. If customers are dissatisfied with their DaaS provider, they can
potentially migrate their configurations and data to another DaaS provider built on the same
software. The point of lock-in with this approach is with the tooling software versus the hosting
platform.

■ Alternate DaaS platforms — These are vendor DaaS platforms based on other, often cloud-
native, DaaS tooling or evolving cloud-capable hybrid tooling. In some cases, these vendors do
not sell direct to end-user organizations, but use managed service providers (MSPs) and
independent software vendors (ISVs) to enable DaaS options. There are a number of DaaS
tooling vendors in this category including, but not limited to CloudJumper, Ericom Software,
itopia, Kivito, Liquit, LISTEQ, Nerdio, Parallels, TetherView and Tilon. Some provide the software
for the platform; others support a platform for MSPs and ISVs to “plug into” and may also sell
direct to end-user organizations. Here, too, configurations and data may be portable to other
providers using the same software if the customer wants to change.

Market Direction
Although DaaS has moved past the Peak of Inflated Expectations on Gartner’s “Hype Cycle for
Unified Workspaces, 2019,” its progress has been stymied somewhat by the fresh injection of
hype from Microsoft’s entry into the DaaS market. (See “Microsoft’s WVD Will Accelerate Virtual
Desktop Maturity but May Not Lower Total Cost of Ownership Enough.”) For some organizations
this caused a temporary selection paralysis as they evaluated the offering in public preview or
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another vendor’s DaaS offering. This enables the market to grow and evolve as service providers
get better insight into customers’ needs, grow client and seat numbers, and improve customer
confidence to adopt.

The following initial deployment use cases will continue to be attractive for initial DaaS adoption;
but maturing DaaS offerings present opportunities for wider organization penetration to match
and extend beyond VDI deployment use cases:

■ Proofs of concept and test workloads

■ Temporary/seasonal workers, contractors and third-party access

■ Secondary workspaces

■ Business continuity/disaster recovery (BC/DR)

■ Mergers and acquisitions (M&A)

■ Branch office expansion (minimizing infrastructure deployment lead times)

■ Remote workers, especially geographically distant workers

■ Contact centers

Organizations are starting with use cases that don’t require significant application and data
connectivity with on-premises infrastructure and data stores or for short-duration use cases with
a plan to extend DaaS to permanent use cases if and when the TCO becomes more attractive.
(See “Cost Optimization Is Still Not a Reason to Implement VDI or DaaS.”)

Several technology, service and licensing trends bode well for the DaaS model:

■ DaaS vendors are gravitating to a hyperscale platform by default. For performance, security,
compliance and sovereignty requirements, organizations may have specific hosting
requirements that cannot be provided by hyperscale platforms. However, many of the DaaS
vendors that have entered the market are partnering with hyperscale vendors to leverage
platform agility, offer customers choice and help drive down service pricing. Most importantly,
this approach helps DaaS vendors scale geographically and sell to organizations with more
geographically distributed users, independent of organization size. Many organizations have
selected a hyperscale cloud vendor for data and applications, and running virtual desktops on
the same provider yields performance improvements (perhaps even over their current physical
PC environments).

■ Platform algorithms optimize usage patterns. Most DaaS offerings are billed as per user, per
month, with different pricing tiers based on the size of the virtual machine (VM; for example,
number of vCPUs and RAM allocation). Customers can pay a flat rate or based on
consumption.
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infrastructure optimizes usage, customers may no longer need to choose a model for their
workers or actively manage subscriptions to achieve the lowest cost. However, hyperscale
vendors are trying to maximize cloud platform utilization and revenue. This conflict of interest
perpetuates “reserved cloud instances” that sacrifice elasticity for lower infrastructure unit
costs and will likely persist for several years to come. This complexity may be hidden from the
customer with a DaaS service that includes hyperscale infrastructure in its pricing.

■ Cloud management planes have evolved beyond hybrid DaaS and have become workspace
aggregators. The broader impact on moving to the cloud for workspace delivery will be an
expansion in functionality to securely control application, workspace and data delivery across a
broad array of platforms and endpoints. This will involve identity integration, single sign-on
functionality and ultimately the evolution of intelligent features powered by machine learning
that enhance security, operations automation and decision support as well as user experience.
Most DaaS offerings in 2019 require organizations build and integrate global deployments
themselves, but will move to a globally integrated architecture, managed from a single pane of
glass, across all regions, use cases, and end devices.

■ Organizations are moving more workloads and data to the cloud. The overriding trend is for
organizations to source many new services from cloud platforms and minimize investment in
data centers, except where necessary, and often via colocation or hosting providers. A major
driver for considering DaaS is the migration to cloud office suites, such as Microsoft Office 365
and Google G Suite. Some organizations move back-office services such as Microsoft’s
Exchange and SharePoint to the Microsoft hosting platform. This is often in conjunction with
greater consumption of IaaS, PaaS, and an increasing number of SaaS-native, cloud-hosted
business applications. This move of back-office services will make DaaS attractive as an
external hosted workspace to aggregate content and deliver better than on-premises
performance.

■ Network security and segmentation is becoming an essential capability. The use of software-
defined WAN (SD-WAN) technology to enable hybrid cloud DaaS environments is a key enabler
to working anywhere. It also enables a broad set of end-user computing use cases when data
and services exist across cloud platforms and in traditional on-premises data centers. This
includes secure workspace environments that may persist for long-term employee use cases,
but may need to be transient when connecting workers with external parties such as
contractors, partners, suppliers and customers.

■ Use of self-service portals for administrators and end users is increasing. This strategy
represents a way to reduce the need for costly end-to-end-service DaaS offerings by enabling
self-service for an organization’s employees. There is a cost for all organizations in ensuring
employees have the digital dexterity to take advantage of these features, but it is a way of
attacking DaaS service prices. Administration self-service portals are mainly targeted at MSPs
to allow DaaS software and platform vendors to scale their business through an indirect model.
But this presents more (white-labeled) vendor choice for organizations, fuels competition and
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minimizes pricing, especially if service providers can benefit from a low-touch management
platform that favors simplicity and automation.

■ Microsoft licensing is evolving. Microsoft’s August 2019 licensing change (see Note 5) may
require customers spend more to get Virtual Desktop Access (VDA) rights when running
Windows on other cloud providers. Microsoft’s multitenant hosting program (see  Qualified
Multitenant Hoster [QMTH] Program) enables participating providers to allow customers to run
Windows 10 images in multitenant environments. It also allows providers to license customers
without Microsoft Volume Licensing Agreements for Windows 10 Enterprise using a Microsoft
Services Provider License Agreement (SPLA).

Market Analysis
We have assessed a broad set of offering features in terms of service scope, regulatory
compliance, industry adoption, geographic coverage and price.

Service Scope
Fundamental DaaS services include provisioning, patching and maintenance of the management
plane and access to resources to host workloads (as shown in Figure 1). From this base, various
application packaging, provisioning and management services can be added. These services
commonly include, or integrate with, identity management and security services, with security
extending from malware protection and simple backup/restore to full business continuity and
workspace protection and recovery.

Many DaaS providers have evolved from hosting providers, and the scope of services blurs
between DaaS and MSP service elements that provide synergy with infrastructure and data
hosting. For example, a full BC/DR offering requires the service provider to have control of the
recovery components and location.

Common service features or extensions found in today’s various DaaS offerings are listed below.
These will be valuable considerations when assessing a DaaS offering’s suitability and comparing
prices of offerings with different feature sets:

■ Application management

■ Application packaging

■ Backup/restore options

■ Business continuity/disaster recovery

■ Data migration

■ GPU support

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■ Identity management

■ ISV integration (integrated third-party applications)

■ License management

■ Regulatory compliance commitments

■ Self-service administration

■ Self-service user features

■ Single sign-on

■ User personalization management (UPM)

■ Workspace analytics (usage pattern reporting)

Regulatory Compliance
Increasingly, DaaS vendors are evolving their offerings to ensure industry compliance and to
widen their addressable market. Typical targeted compliance standards include:

■ Federal Risk and Authorization Management Program (FedRAMP; including Federal Information
Security Modernization Act [FISMA] and International Traffic in Arms Regulations [ITAR])

■ Health Insurance Portability and Accountability Act (HIPAA; including Health Information
Technology for Economic and Clinical Health [HITECH] Act)

■ International Organization for Standardization (ISO; including 9001 and 27001)

■ Payment Card Industry Data Security Standard (PCI DSS)

■ Sarbanes-Oxley Act (SOX)

■ System and Organization Controls (SOC) (1 [SSAE 16] through 3)

■ General Data Protection Regulation (GDPR)

Many of the DaaS vendors Gartner has spoken with prioritize compliance demands, either in
response to an early adoption demographic and their existing clients’ compliance demands or as
a result of an industry-focused go-to-market approach. Thus, compliance coverage varies
between providers and is an important differentiator.

Industry Adoption
Despite regulatory compliance demands and an aversion to cloud, financial services and
healthcare
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premises VDI when the infrastructure is due for refresh. Several other considerations and data
points must be evaluated before such a conclusion could be reached, but this trend is worth
following. It is also worth calling out that some services are targeted directly at an industry. For
example, the GPU-enabled DaaS offering from Cloudalize targets the engineering and
construction market with its designer workspace solution. Other vendors offering GPU-enabled
DaaS have found customers in the manufacturing and natural resources industry where design
tools demand powerful graphics capabilities.

Geographic Coverage
Most DaaS vendors hail from North America, and certainly this has been the most active
geography for bringing DaaS offerings to market. North America organizations can, in most
cases, be adequately served from a single hosting instance for performance purposes, although
resilience and business continuity may demand a more robust strategy. Hyperscale platform
vendors will argue that their coverage is limited only by the presence of a data center instance,
and that these instances are continuing to expand over time.

Performance will be a limiting factor for cross-geography solutions, as the physical distance
between the users of the service and the hosting platform increases (see “How to Ensure Your
Network Architecture Is Ready for VDI and Desktop as a Service”).

It is important to assess not only the infrastructure footprint, but also its ability to meet
organizations’ needs in different geographies. For example:

■ Is there a local/in-country vendor presence?

■ Does the vendor support the language needs of the prospective customer?

■ Can the vendor support the distribution of client employees or users?

■ Can the provider meet the compliance needs of the prospective customer, which vary by
geography as well as by industry?

As such, some vendors focus on domestic/local markets. For example, Tilon is a successful DaaS
vendor focused primarily on South Korea and Japan. Diso is a vendor focused on DACH
companies with data sovereignty demands.

Pricing
It is no surprise that with a wide array of service scope options comes a wide array of pricing
variations. Prices can start very low for a per-user, per-month charge, but often this pricing only
covers core infrastructure rather than all the other service components discussed (akin to the
IaaS model in Figure 1). I&O leaders should be cautious to compare pricing based on workload
needs and service requirements.

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but varies significantly with service scope, delivery architecture (e.g., VDI versus server-based
computing [SBC] where user sessions share the resource profile) and infrastructure resource
allocation (usually defined by compute, memory and storage allocations). The addition of GPU for
high-performance computing (HPC) and graphically intensive workloads can take pricing to the
next level. GPU-enabled workspaces can run into hundreds of dollars (based on 2018 vendor
survey data) for a high-end computer-aided design (CAD)-/computer-aided manufacturing (CAM)-
ready platform. However as physical GPUs can be leveraged across multiple user sessions as
well as dedicated GPU/multi-GPU pass-through models, the pricing range is very broad, and the
technology can apply to general-purpose use cases as well as specialist GPU-intensive scenarios.

The variance in service scope, combined with residual retained service costs, can make TCO
much harder hard to calculate. It is often more challenging to understand the TCO delta, or the
impact of moving an existing service to DaaS versus using DaaS for a new use case. This is
because existing costs are distributed across multiple competencies or budgets. (For example, it
is often difficult to extract an applicable full-time equivalent [FTE] from administration labor
costs.) In Gartner’s “Cost Optimization Is Still Not a Reason to Implement VDI or DaaS,” the TCO of
a DaaS-based approach assumes $50 per user, per month for pooled DaaS and $60 for persistent
DaaS.

More intelligent provisioning of cloud infrastructure on demand, lower cloud infrastructure pricing
and increasing self-service features promise to reduce DaaS pricing, enabling a greater number of
use cases and within the reach of a broader number of organizations.

Representative Vendors
The vendors listed in this Market Guide do not imply an exhaustive list. This section is intended to
provide more understanding of the market and its offerings.

Market Introduction
The following list (see Table 1) includes representative DaaS vendors and their DaaS service
offering.

Note that, although these representative vendors may form part of a provider shortlist, this list is
in no way intended to promote or prioritize services compared with vendors that are not included.

Table 1: Representative Vendors in the DaaS market

Vendor Head Office Service Name

 Anunta Mumbai, India Managed DaaS on Azure Cloud


Fully Managed Horizon Desktops

 Amazon Web Services Seattle, Washington Amazon WorkSpaces

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Vendor Head Office Service Name

 Citrix Fort Lauderdale, Florida Citrix Managed Desktops

 Cloudalize Ghent, Belgium Desktop-as-a-Service

 CloudJumper Garner, North Carolina Cloud Workspace

 dinCloud Clarksville, Tennessee dinWorkspace

 Diso Bern, Switzerland Secure Workplace

 Dizzion Denver, Colorado Cloud Desktops

 Effortless Office Las Vegas, Nevada Effortless Desktop

 Evolve IP Wayne, Pennsylvania Desktop as a Service

 Kivito Stuttgart, Germany deskMate

 Microsoft Redmond, Washington Windows Virtual Desktop

 Nutanix San Jose, California Xi Frame

 Paperspace New York, New York Paperspace Core

 Cox Business-RapidScale Irvine, California Desktop as a Service

 Tehama Ottawa, Canada Tehama

 Tilon Seoul, South Korea Dstation

 VMware Palo Alto, California Horizon Cloud

 Workspot Campbell, California Workspot Desktop Cloud

Source: Gartner (November 2019)


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I&O leaders responsible for mobile and endpoint computing strategies should:

■ Create a decision framework to determine DaaS suitability across different use cases, such as
seasonal worker, contractor provisioning and disaster recovery, and expand to longer-term use
cases including contact center and remote worker provisioning as TCO improves.

■ Improve the odds of success with your DaaS initiative by prioritizing user requirements that are
critical to DaaS adoption, such as performance levels and user experience, rather than focusing
on cost alone.

■ Use DaaS to improve service levels or user experience in situations where your organization is
currently running VDI on-premises or where you’ve tried VDI and failed.

■ Minimize risk by ensuring you can trial services with minimal or zero commitments.

■ Simplify migration between providers by developing an exit strategy before procuring a DaaS
service. Changing external providers may be more challenging than on-premises migration,
especially if significant volumes of data have been migrated to vendor’s platform.

Note 1
Representative Vendor Selection
The representative vendor selection focus is on new as well as established DaaS service
providers delivering services direct to end-user customers rather than to tooling or platform
partners. This in no way diminishes the value of these other vendors within the ecosystem; rather,
it highlights the fact that the B2C service contract will be between the service provider and the
customer. DaaS service providers should be the focal point. Some of the vendors listed sell
services direct as well as enable MSPs and ISVs, following a multichannel strategy.

Gartner estimates the DaaS market has grown to well over 100 vendors but has picked 19
representative vendors that have low minimum term (12 months or less) and volume (50 seats or
less) commitments and have been discussed in Gartner client inquiry.

Note 2
Updated DaaS Definition
Gartner defined DaaS as “a service offering that deploys a virtualized desktop experience,
delivered to a customer on demand from a remotely hosted location.” While this definition has
served well for the last few years since the “Market Guide for Desktop as a Service” was first
published (2016), the expansion of the market, increasing options and service selection confusion
require a slightly more granular classification.

The use of the word “desktop” in DaaS is somewhat of an anachronism. Although organizations
see a hosted desktop service as a desktop or PC replacement, it doesn’t replace the need for an
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endpoint device as part of their services, but we will not include vendors that only offer endpoint
devices (which Gartner terms “PC as a service”).

The word “desktop” is synonymous with a Windows Desktop operating system and the hardware
that hosts it. The desktop provided by the DaaS vendor may use a server operating system with
either a shared or dedicated operating system (or indeed a non-Windows-based OS, although
these are in the minority). As such, the word “workspace” is far more accurate and future-proof. It
also links strongly with the technologies in unified workspaces that Gartner is tracking and
publishing related research about.

Even though some vendors use the terms “workspace as a service,” “cloud workspace,” “cloud
VDI” or even “cloud desktop,” most of the industry still uses the term “DaaS.” Thus, for now, this
market is best defined as DaaS to avoid confusion and to help create a consistent understanding.
Over time, the market naming and definition may change.

Note 3
DaaS Bring Your Own License (BYOL) Options
DaaS providers that offer bring your own license (BYOL) options will need to conform with
Microsoft’s dedicated cloud licensing — see  “Updated Microsoft Licensing Terms for Dedicated
Hosted Cloud Services.”

Note 4
Microsoft Announced Windows Virtual Desktop General Availability
(GA)
On 30 September 2019, Microsoft announced worldwide general availability of  Windows Virtual
Desktop, just over one year after its first public announcement.

Note 5
Microsoft Update Licensing Policy
On 1 August 2019, Microsoft announced changes to licensing for dedicated hosted cloud
services, which take effect as of 1 October 2019 or the next time an organization renews its
agreement. The DaaS impact is that, instead of using Windows 10 Enterprise E3 or E5 to license
users to access DaaS if their devices were purchased with Windows Professional, they will need
VDA, which may be up to 20% more expensive.

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