"Fastest remote desktop I have ever used.” – G2.com g2 vdi evolve ip_2022

2023 Gartner® Market Guide for Desktop as a Service

The rapid increase in remote and hybrid work, as well as the need for business continuity, has made DaaS a major priority for organizations. I&O leaders can use the assessment of the market segmentation and use cases for DaaS in this research to make better investment decisions.

 

Overview

Key Findings

  • Desktop as a service (DaaS) market spending grew by 22% in 2022 compared with 2021 and is forecast to grow by 19% in 2023 as I&O leaders continue to adopt DaaS to enable remote work.
  • The DaaS market has developed into three segments: self-assembled, vendor-assembled and vendor-managed.
  • Microsoft dominates the DaaS market due to license bundling, perceived network proximity with Microsoft 365 data and product terms that restrict which vendor’s clouds the Microsoft Windows versions of Microsoft 365 Applications can be installed.
 

Recommendations

I&O leaders responsible for digital workplace transformation and DaaS strategies should:

  • Identify the organizational fit for DaaS by assessing whether current (non-DaaS) end-user computing solutions can securely and cost-effectively enable hybrid and remote workstyles.
  • Shortlist appropriate DaaS vendors based on the services (e.g., graphics processing unit [GPU], compliance, support, regional availability, commercial terms) and rank them based on key features and how the service complements in-house IT skills.
  • Maximize improvements to digital employee experience by carefully balancing DaaS costs with performance.
 
 Strategic Planning Assumption

By 2026, 80% of DaaS sales will be vendor-assembled or vendor-managed solutions compared with less than 20% in 2023.

Market Definition

DaaS is the provision of virtual desktops by a public cloud or service provider. DaaS is bought by I&O leaders seeking to provide desktop or application end-user experiences from virtual machines accessed using a remote display protocol. DaaS vendors incorporate a fully managed control plane service into their offerings, which facilitates user connections and provides a management interface. DaaS can be delivered preconfigured as a service or can be delivered as a DaaS platform where clients would be responsible for self-assembly, configuration and management. It is charged on subscription- or usage-based payment structures.
 

Market Description

The DaaS market has three key distinct types of offerings, with vendor products positioned in one or more of the three segments:
  • Self-assembled DaaS is where the client assembles a DaaS solution from components made available by the vendor. Clients would select and configure the cloud infrastructure, profile management technology and associated storage. Clients would be responsible for configuration and management of the user virtual machines. The vendor operates the client-selected components and provides management and updates of the infrastructure through the life of the service. This segment includes Microsoft Azure Virtual Desktop, Amazon WorkSpaces, Citrix Systems (DaaS) or VMware Horizon Cloud.
  • Vendor-assembled DaaS is where the vendor defines most of the solution. The client has less configuration work to perform and focuses on management of the user virtual machines. This segment includes Amazon WorkSpaces, ATSG(dinCloud), Windows 365, Workspot and others.
  • Vendor-managed DaaS is where the full service is managed and supported by the vendor. Managed DaaS vendors generally manage the virtual machine operating systems (i.e., patch and update the user’s Windows image) and in some cases provide user support. Vendors in this segment include systems integrators, managed service providers Dizzion, ATSG(dinCloud), Workspot and others (see Table 1 and Figure 1).

Table 1: DaaS Market Segment Organization Profiles

DaaS Market Segment
Organization Profile

Self-assembled DaaS

  • Organizations that want the most flexibility or higher levels of service in configuring their environments
  • Organizations that need to run a hybrid solution, on-premises and cloud, from a single cloud-hosted DaaS control plane
  • Organizations that have the technical capability to maintain a complex solution

Vendor-assembled DaaS

  • Organizations that want simpler configuration and operation for their DaaS environment
  • Organizations that want a standardized-packaged DaaS solution
    Organizations that require vendor-specific features and services

Vendor-managed DaaS

  • Organizations that do not have the virtual desktop infrastructure (VDI) skill set and want the vendor to own the complete operation of the entire solution
Source: Gartner (March 2023)
 

Figure 1: Typical Responsibilities for Service Components in the 3 DaaS Segments

Figure_1_Typical_Responsibilities_for_Service_Components_in_the_3_DaaS_Segments

 

Market Direction

Investment in DaaS is rising as clients seek to provide secure solutions that are less prone to cyberthreats. Fifty-five percent of clients told Gartner that they plan to increase spending in DaaS through 20241 (see Figure 2). The DaaS market is forecast to grow through 2026, but at significantly lower rates. The compound annual growth rate (CAGR) from 2022 to 2026 is forecast to be approximately 14%, compared with a CAGR of 59% between 2019 and 2022. Although DaaS is a significant market, by Gartner estimates of user volumes, it is less than 10% of the physical enterprise PC market.

Adoption of self-assembled DaaS services dominated the market in 2021 and 2022. We expect a shift toward adoption of vendor-assembled and vendor-managed DaaS in 2023 and beyond, driven by clients not wishing to have responsibility for operating DaaS infrastructures as well as net new clients that require vendor-managed solutions that reduce complexity and skills required. The shift toward vendor-assembled and vendor-managed DaaS is today inhibited by actual or perceived cost increases.

While the DaaS market continues to grow, we have observed some DaaS clients reducing their spend on DaaS and moving back to physical PCs. Five percent of clients said they planned to reduce spending in DaaS, so it remains a small proportion of DaaS deployments.1 Gartner clients cite moving from DaaS to physical PCs due to:

  • Cost
  • Difficulty optimizing real-time audio and video (RTAV), resulting in poor employee sentiment toward DaaS
  • Complexity of operations, especially with self-assembled DaaS solutions

The selection of DaaS vendors through 2026 will increasingly be based on employee experience, alongside security and cost. Increased focus on data residency and security from DaaS vendors has and will continue to provide regulated clients with compliant DaaS solutions in more countries and regions. To date, we have seen financial services and public sector DaaS adoption focused in regions where sovereign clouds are available.

Figure 2: Gartner Client DaaS Investment Plans

Figure_2_Gartner_Client_DaaS_Investment_Plans

The market remains primarily focused on use cases that involve securing access to desktops for a highly distributed or hybrid workforce. Third-party employees are a common use case, which is common for segments such as business process outsourcing or software development.

Market Analysis

Gartner clients are selecting self-assembled, vendor-assembled and vendor-managed DaaS based on the level of operational complexity balanced with cost. More organizations that have the skills to operate complex DaaS solutions are selecting vendor-assembled or vendor-managed solutions because this frees up those skilled resources to focus on delivering employee experience, automation and broader digital initiatives. Cost remains a key selection criteria for DaaS. Many clients have adopted multisession-based virtual machines to reduce costs. Clients must carefully assess the cost versus performance of all elements of DaaS operations before selecting a solution. Table 2 shows how prices vary based on the style of virtual desktop and whether the solution is self-assembled, vendor-assembled or vendor-managed.

Table 2: Negotiated Price Ranges per User per Month for DaaS

Specification
Self-Assembled
Vendor-Assembled
Vendor-Managed

Basic

Multisession pooled

Typical VM specification 8vCPU 32 GB RAM 64 GB Storage providing 2vCPU and 8GB Ram per user

 

 

$15-25

 

 

$23-40

 

 

$38-50

Medium

Single-session pooled

Typically 4vCPU 16GB RAM

128GB Storage

 

$30-50

 

$45-70

 

$50-90

High Performance

Single-session persistent

Typically 8vCPU 32GB RAM

256GB Storage

 

 

$100-130

 

 

$100-175

 

 

$120-200

Source: Gartner (March 2023)

Market penetration of vendor-assembled DaaS solutions has increased in the previous 12 months and will continue to increase. This is driven by clients with limited skills to operate virtual desktop solutions, either on-premises or in the cloud, or it is driven by net new users for virtual desktops. Gartner clients often cite a desire to “get out of managing virtual desktops”; vendor-assembled and vendor-managed DaaS solutions are a good fit to help clients hit this priority.

This Market Guide lists 24 vendors; however, Microsoft is the dominant vendor (see Note 2). Gartner estimates that the Azure platform accounts for 90% of DaaS workloads, with Microsoft’s own offerings estimated to make up 60% of Azure’s DaaS workloads. Microsoft dominated DaaS adoption over the last three years because:

  • Many clients have a Microsoft-first approach for digital workplace software and services.

  • Microsoft benefited from adoption of Windows 10 and Windows 11 multisession, which is only available on Azure Virtual Desktop, either directly or via Microsoft partnerships with other vendors (including Citrix Systems, Parallels International, VMware and Workspot).

  • Third-party tools, which optimize operations and costs of a native Microsoft Azure Virtual Desktop deployment (e.g., Nerdio, HashiCorp [Terraform]), are available.

  • Managed service providers deliver DaaS using Azure as a platform.

  • The installation of Microsoft 365 Applications is possible on Azure but not on Alibaba, AWS or Google (see 3 Compliance Questions to Ask When Licensing Microsoft Windows and Office for VDI and DaaS).

  • Microsoft develops the Windows OS, the Azure platform, Microsoft 365 and Microsoft Intune, meaning their offerings can be integrated into a single vendor solution.

 
 

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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.

The following list of DaaS vendors provides a view of common vendors within the DaaS market (see Table 3). The list includes some regional and global vendors to allow organizations to assess how these providers can help with geographic coverage challenges. Vendors were selected based on awareness of them in the market and on discussion with Gartner clients that reference them (see Note 1).

Vendor Selection

Table 3: Representative Vendors in DaaS

Vendor

HQ

Product Name(s)

 Accops

Pune, India

Accops DaaS

 Alibaba

Hangzhou, China

Elastic Desktop Service

 Amazon Web Services

Seattle, Washington

Amazon WorkSpaces

Amazon WorkSpaces Core

Amazon AppStream 2.0

 Anunta Tech

Mumbai, India

Enterprise DaaS (Anunta Desktop360)

DesktopReady

 Apporto

Palo Alto, California

Apporto

 ATSG(dinCloud)

New York

ATSGOne DaaS

 Citrix Systems

Fort Lauderdale, Florida

Citrix DaaS

 Cloudalize

Merelbeke, Belgium

Cloud Workstations

 Dizzion

Denver, Colorado

Dizzion Managed DaaS

 Evolve IP

King of Prussia, Pennsylvania

Managed DaaS

 Huawei Cloud

Shenzhen, China

Workspace

 IronOrbit

Anaheim Hills, California

INFINITY Workspaces

 itopia

Miami, Florida

itopia

 Leostream

Waltham, Massachusetts

Leostream

 Microsoft

Redmond, Washington

Azure Virtual Desktop

Windows 365 Business

Windows 365 Enterprise

Microsoft Dev Box

 Nutanix

San Jose, California

Nutanix Frame

 oneclick

Zurich, Switzerland

oneclick VDI

 Parallels International

Washington, USA

Parallels RAS

 SimpleCloud

Madrid, Spain

SimpleCloud AECM

SimpleCloud Animation

SimpleCloud Education

SimpleCloud Video Games

 Softdrive Technologies

Toronto, Canada

Cloud Virtualization

 Tehama

Ottawa, Canada

Secure Virtual Desktops

Carrier for Work

 TetherView

Oceanport, New Jersey

Digital Bunker

Source: Gartner (March 2023)

 

Market Recommendations

To take the best advantage of DaaS, I&O leaders should:

  • Identify the organizational fit for DaaS by assessing whether current end-user computing solutions can securely and cost-effectively enable hybrid and remote workstyles. Focusing on secure and distributed work will offer the best fit, especially where regulators demand enhanced levels of compliance.
  • Shortlist appropriate DaaS vendors based on the services (e.g., GPU, compliance, support) they offer and rank them based on regional availability, key features and how the service complements their IT skills and commercial terms. There is a balance between cost, complexity and the skills available within an IT organization. For example, organizations with skills in operating on-premises VDI environments will be better suited to self-assembled DaaS solutions.
  • Maximize improvements to digital employee experience by carefully balancing DaaS costs with performance. For example, don’t expect a high-performance information worker experience when specifying a virtual desktop to be 2 vCPU cores and 8GB of RAM. Provide a blend of virtual desktop specifications to meet the needs of all target use cases.

Evidence

2022 Gartner RC Omnibus — February Survey: The 2022 Gartner February Omnibus Survey was conducted online from 24 February through 9 March 2022. In total, 77 Research Circle members responded to the survey from North America (n = 40), EMEA (n = 28), APAC (n = 6) and Latin America (n = 3).

 

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. Some of the vendors listed sell services directly and enable managed service providers (MSPs) and independent software vendors (ISVs), following a multichannel strategy. Gartner estimates the DaaS market has grown to well over 100 vendors but has picked 24 representative vendors that have low minimum term (12 months or less) and have been discussed in Gartner client inquiry.

Note 2: Gartner's Initial Market Coverage

This Market Guide provides Gartner’s initial coverage of the market and focuses on the market’s definition, rationale and dynamics.

© 2023 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. It consists of the opinions of Gartner's research organization, which should not be construed as statements of fact. While the information contained in this publication has been obtained from sources believed to be reliable, Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner research may address legal and financial issues, Gartner does not provide legal or investment advice and its research should not be construed or used as such. Your access and use of this publication are governed by Gartner’s Usage Policy. Gartner prides itself on its reputation for independence and objectivity. Its research is produced independently by its research organization without input or influence from any third party. For further information, see "Guiding Principles on Independence and Objectivity." Gartner research may not be used as input into or for the training or development of generative artificial intelligence, machine learning, algorithms, software, or related technologies.

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