Michael Keen just posted an interesting entry on “Value Innovation”. In it, he discusses the heated competition that’s emerged in the x86 virtualization market and how the primary players have resorted to one-upsmanship (i.e. using standard marketing tactics like bundling) as opposed to really trying to break new ground. He also raises the side issues of virtualization licensing and pricing complexity (challenges that I have been tracking closely) by referencing a recent post on the subject by Tarry Singh. This all leads up to a discussion of “Value Innovation”, a concept pioneered by Charles W. L. Hill and described at length in the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne.

“Value Innovation” is all about raising or creating value for a market while simultaneously reducing or eliminating features or services that are of limited or no value to the customer. By doing this, a company can find a “Blue Ocean,” or an unknown market opportunity with no competition, and get away from operating in “Red Seas,” or businesses that are already well known and which are highly competitive.

From my perspective, it appears that the VDI space in particular is already suffering from the typical competitive behaviors of a “Red Sea” market. While this has made for some interesting recent public debates, all it really does is make things a lot more confusing and challenging for the market and its customers.

At Desktone, we believe that value innovation for VDI can be created in a few key ways:

1. Turnkey Solution – Sourcing and integrating all the components of a VDI solution, including all the necessary software, is complicated. Providing a turnkey solution, at least for a basic VDI offering, creates value for the customer while eliminating unwanted complexity.

2. Economic Alignment – Providing VDI as a subscription service, where customers pay for virtual desktops as they use them, creates the proper economic alignment between vendor and customer. This is in contrast to the traditional enterprise IT vendor business model, where customers pay upfront for components and tools and subsequently figure out exactly how to integrate all the pieces and extract the promised value. In a services model, if the customer isn’t deriving value, the service provider isn’t either.

3. Platform Independence – A VDI solution should be truly hypervisor and remoting protocol agnostic so that service providers can avoid much of the lock-in associated with traditional enterprise ISV platforms.

4. Deployment Flexibility – A customer should have the choice of deploying the solution within their own data center or having it hosted at a service provider facility. The software powering their VDI solution should support both deployment models simultaneously and should allow for a seamless transition from one model to the other.

These principles led us to our vision of desktops as a service (DaaS) and the motivation to build the Virtual-D Platform, the industry’s only solution that enables virtual desktops to be delivered as a truly outsourced, subscription service. We firmly believe that by focusing on value innovation, we will help enterprise customers quickly realize the benefits of VDI while at the same time enable our service provider partners to capitalize on what we see as the next “Blue Ocean” in managed hosting.