Nerdio's strategy evolves for cloud desktop, Azure markets

What does Nerdio Manager for MSP do?

Sobel: That makes perfect sense to me. We connected because of the launch of Nerdio Manager for MSP. So, I'm going to ask a silly question: What's the thing do? What does it do?

Vladimirskiy: Great question. So, Nerdio Manager for MSP is an automation platform. I know I'm [about to give] you the term that I don't like using, but I will use it because it will communicate what it is: It's a single pane of glass that lets MSPs price, provision, manage and optimize Azure-based IT environments with a special emphasis on WVD, Windows Virtual Desktop, being at the core of what it does, and everything that's ancillary to Windows Virtual Desktop. So, think servers and storage and licensing and networking -- everything that you really need to make a virtual desktop environment work -- is also deployed, managed, optimized and priced with Nerdio Manager for MSP.

The direction that virtual desktops are headed

Sobel: OK. So, I've got a premise. I'm going to explain to you my premise, and then I'm going to ask you to react to it. My premise is that virtual desktops are a steppingstone to true virtual applications or streaming applications. One of the reasons I think game streaming is a space that everyone is interested in is because it's such a hard workload, and once you master it, it's easy to do everywhere because you've solved the difficult technical problem of gaming with a demanding user base: gamers. And so, anything in between is a steppingstone there. What's your reaction to that premise?

Vladimirskiy: I largely agree with you. One of the functions of just an end-user computing environment -- i.e., a desktop -- is to deliver applications. In that feature or that functionality of a desktop, I totally agree with you that it's a steppingstone to a world that's going to look much more like SaaS, all SaaS at some point. So, there's going to be that transitional period, which is why I think you're calling it a steppingstone. I think, from that perspective, I definitely agree with you.

There is one other aspect to the end-user computing environment for which it may or may not be a steppingstone and which may or may not go away. It may go away because it becomes less significant if all the applications are now SaaS. And that is the user state or the user customization. Think about [how] it's not just the applications that you run. It's the way your background looks and your default printers and your map drives and the way your folder structures are set up. There is so much personalization that goes into our workspace, which is our desktop, and that's really not an application thing.

So, unless all of these applications, which are generally provided by different vendors, unless their launchpad becomes unified, where you can have the same level of customization and control as a user, the desktop is still going to be that thing that you go into to then get to everything else. And it may become a SaaS offering at some point as well. Citrix and VMware and lots of other companies have this concept of a workspace, where you go to a web-based portal and you have shortcuts into your desktops. It's kind of the beginning of that, but if you think about either your Windows or your macOS, there is a lot more to it than just a webpage that has shortcuts to your favorite apps.

Sobel: OK. But if I think about this in kind of a mobile world -- and I don't want people to get too hung up on the example, but I've got to use it -- but if I think iOS and Android vs. Windows and Mac, and I start abstracting a little bit to this level of, well, everything is 'app-ified' and I'm backing up, can we see directionally getting where maybe I manage that user experience onto the device and then stream apps? Is that a logical directional piece here?

Vladimirskiy: Potentially. Potentially. I think, if I look at my own workflow, I'm an Apple ecosystem person, so I have every Apple device there is, and they're all very well connected.

Sobel: You and me both.

Vladimirskiy: When I'm doing work, I work on a macOS device with multiple screens, and I do a lot of interapp work. There are a lot of things that I'm doing that are not within an app [but] are cross-app. Whereas my mobile devices, which I love as well, [are different]. My iPad is primarily my mobile device, and I use it for everything, [but] it's really a single-function-at-a-time kind of a thing. Yes, I can copy and paste, but it's a little awkward.

And I think that [generally for] apps in an iOS or an Android platform -- at least as they stand right now, and this may change in the future -- unlike software and the workspace on the macOS or Windows machine, they're not as tightly or they can't be as tightly integrated with each other. And I think, for me and probably lots of other users, for efficiency and workflow sake, I like having that collaborative experience between my apps on a macOS or a Windows machine. So, I think one of those OSes, as of today, would need to be available to a user to be the most productive that they can be in a typical scenario. If you're a user who does only email, then using an app on your iOS device is perfectly fine. There's really nothing else you need. But if you're doing lots of other things, I think you're going to be limited and not as productive as you could be on a Mac or a Windows device. Would you agree?

Sobel: I'll buy that as a 'now,' [but] is it the direction we're going or something along those lines? And I think that's what I'm getting at. But I take your point completely for the now. And, obviously, we have to work in the now, but we also have to plan for the future.

Working within the Microsoft ecosystem

Sobel: Speaking of the future then, are you worried about Microsoft just swallowing up this space? I mean, I could see a world where something like their Cloud PC project, which, while they haven't announced it, the job descriptions are out there. And that's the idea of them having a fully managed cloud, in a way that combines Windows Virtual Desktops with actual MSP value, because they could take on the help desk and stuff. Are you worried about Microsoft swallowing up this space?

Vladimirskiy: It's probably the most common question that I get, even outside of the context of Cloud PC but just the WVD platform that keeps being enhanced and improved by Microsoft at a pretty rapid pace. To say, 'not worried at all,' I think would be foolish and shortsighted, and I don't think I won't go as far. But I think, strategically, we are very aware, and we are building our products and delivering our values in such a way that is complimentary and built on top of Microsoft, rather [than] a competitive product. And I will explain why.

Microsoft is in the business of hyperscale, mass-market, platform-type services that can really be leveraged by anybody and everybody for anything and everything. Their goal is to be the computer that everyone uses for everything. They, at least as of now -- no one knows what the future will hold, but as of now -- they don't go into use cases. For example, the MSP use case is not something Microsoft has really been in or it really has any products for that are built, let's say, specifically for MSPs, because it's a very unique, narrow, kind of a niche use case, because MSPs have very different needs than enterprise customers or even SMB customers directly. And what we try to do with our product is we try to identify -- having been an MSP, knowing what it takes to build and operate an MSP practice -- what are the challenges, what does Microsoft provide and what is the gap? And our job is always living in that gap. That gap will always change. We are always going to be in that gap, and we're always going to address the biggest and hardest problems first.

Addressing easy things that can easily be done with a line of code, or even with a portal click on the native platform, doesn't really add a lot of value. So, we're always looking [at], 'OK, well, what's the gap, and what's the hardest thing in that gap that we should go after next?' And strategically, that's really how we build our product. We understand the very specific use case that we go after, and we solve technical challenges that are specific to that use case.

So, your question about Cloud PC: I don't know anything about it other than what's been leaked in the job descriptions and things like that. But I would imagine it's going to be a generic service that's going to be available to the world. It's going to be available probably to enterprise customers, probably to SMB customers. How well will it be integrated with MSPs' workflows of what they do in general? We don't know. So, when it comes out, I'm sure there's going to be a significant amount of gap that we'll be able to add value in. And I'm certain that we're going to be looking at that and building product to help solve that challenge.

Sobel: OK. So, it's a completely fair approach. Existing in the gap is a traditional Microsoft partner approach when being an ISV. It's definitely a real value and part of why they have the ecosystem they do.

Why cloud management tools focus on 'cost savings'

Sobel: I want to pivot a little bit. I want to ask about something that is a bit of a pet peeve of mine, and I want to get your take on it. When I read a lot of the press, the press releases in particular, around products in the cloud space -- and, admittedly, the press release for Nerdio Manager did this, too -- it focuses a lot on costs as it relates to cloud. 'Our technology will help you manage cloud costs,' specifically. Of all my concerns about the cloud, when I think about things like security problems of misconfigurations or the lack of zero trust, cost actually falls much lower onto my stack ranking of issues. But lots of people lead with it. Why is there so much leading with cost in the way we're talking about these products?

Vladimirskiy: I think it's a very insightful question. But I think that leading with costs -- and I'm going to talk about our case specifically rather than maybe than generic [cases], although I think it can be generalized -- is that cost could be a blocker and is a blocker for most MSPs in adopting Azure, period. So, if an MSP goes to azure.com and opens up the cost calculator and looks, [they might say,] 'I can buy this Dell server and put it in the client's office. I can buy it from Azure. Like, what is this? Why would they ever do such a thing? I'm going to lose money. Nobody's going to ever pay me for this.' So, cost is definitely one of those things that if you don't address from the beginning, the conversation doesn't happen.

There isn't an opportunity to then say, 'Well, once you're in the cloud, you have other challenges.' There's management, there's scale, and there's security like you said. There's lots of other things that follow, but cost, I think, stands in the way of even beginning that conversation.

And it's especially true, very acutely true, when dealing with end-user computing, when dealing with virtual desktops, because that is a very compute-heavy workload. Compute-heavy workloads are really the thing that Microsoft wants you to move away from conceptually, overall. They want you to use PaaS and SaaS, and cost models are optimized around those offers -- whereas IaaS, on the surface, just looks expensive. So, when you're dealing with doing virtual desktops, which means you are deploying a bunch of VMs, and you don't answer the question of, 'Well, how is this going to make sense to my customer at the price point that they can afford,' we don't have anything to even discuss with the MSP, and the MSP doesn't have anything to discuss with their customer.

So, it's really important with our product that one of the value pillars, as I mentioned, optimization, is primarily cost optimization. The cost optimization comes primarily from autoscaling, and autoscaling works in the virtual desktop environment very intuitively, because if you think about a workload like a desktop, most users use it up to 40 hours a week, 50 hours a week -- whatever the number of hours is. But there are 168 hours in every week, which means that less than a quarter of the time it's actually being utilized.

So, that's sort of a classic, perfect use for autoscale, to come in and say, 'If we can figure out when the users will be on, when they are on, we can scale out, scale in. We can do all of the different things to match capacity to demand. We can reduce the cost from the number you see on the website at a dollar down to 23 cents, if you scale it down to 40 hours out of the 168 [hours] in a week.' And it makes a huge difference. And it very quickly shows that, without all the other benefits of the product, you can recoup four times the cost of the license, just in the autoscale savings.

Dynamic server workloads

Sobel: OK. So, I think you've exposed something that I want to dive a little further into. This makes perfect sense for a true dynamic resource. And if I think about Windows desktops, be it the physical or now virtual, that's a true dynamic resource. I only need it 40 hours of the 168 hours, so thus I can turn it on, and that's where a cost savings happens.

But as we talk through this, you were sort of saying, 'Well, a lot of MSPs go to the cost calculator. They put it in there, and they compare against installing a server.' That's the wrong comparison, because, in exactly the same model, if I'm comparing buying a server to running a server in Azure, well, of course, it's way more expensive. But you shouldn't even be comparing those two because they're different workloads. I should actually just make my server workloads dynamic as well. Is the problem there then that the MSPs are not actually truly embracing making those workloads dynamic?

Vladimirskiy: Yes, yes. So, I think maybe using the word 'server workload' is maybe too generic as well. You don't just run a server. You want to run something on that server. So, I think if we break that down one level deeper, we [can] say, 'OK, well, I can run a domain controller in Azure, or I can run a domain controller on premises.' So, if you're running a domain controller in Azure versus on premises, you compare them, CPU by CPU, [and it's] way more expensive in Azure. Now, there are a couple things to keep in mind. No. 1, there's about five different levers that you can pull to make the cost of that VM in Azure much cheaper than it is listed on azure.com. There are reserved instances. There's Azure hybrid benefit. There are burstable instances. There are all kinds of stuff that we try to enable our partners to be able to leverage. And we tell them what combination of those things is efficient. That's Approach No. 1.

Approach No. 2: If you think about even the domain controller, yes, domain controller needs to be on 24 by 7. But if it's servicing lots of logins in the morning or during business hours [and] it's doing very little servicing on the weekend, it still needs to be available for someone to be able to log in. But if you could dynamically resize that VM down and then size it back up during workload hours, you can also include some autoscale savings. And that's something that we do in our product as well.

Now, if you're looking at a file server, then you can say, 'Well, I have a file server on premises. I can have a file server in Azure.' Great, same things apply. You can resize it. You can do reserved instances. Or you can say, 'Well, why am I using a file server to serve up files? Maybe I should be using Azure Files. Maybe I should be using OneDrive or SharePoint.' There is PaaS alternative and SaaS alternative to some workloads that run in servers, but there are still many that don't have an alternative. And again, that's going to change with time, but there's just some things that you can't put in the past, especially line-of-business apps. They just don't exist as a PaaS yet.

Nerdio's vision

Sobel: Which makes perfect sense. That actually then transitions to my last question here. So, thinking ahead -- we've talked a lot about now -- what's your North Star? What's your vision for a fully built Nerdio?

Vladimirskiy: Our mission at the company -- and we sort of repeat this every day, all day, to everybody we talk to -- is to empower MSPs to build successful cloud practices in Azure. It's not about desktop virtualization necessarily. It's not about the specific workload. It's about matching the needs of the market at the given time with what's available for Microsoft and, again, bridging that gap -- making it affordable, making it easy, making it dynamic and scalable, etc.

So, I think, as time goes on and market demands change and what's available natively changes, I think we're just going to have to keep evolving. I mean, if you look at the cadence of product releases and how many versions we do, we are not in the business of building a product and then just going to sell it and signing up as many customers as we can and growing horizontally on something that we've built. We're really in the business of consistently identifying market needs based on customer feedback, based on talking to MSPs and them telling us, 'Hey, it would be great to integrate X, Y and Z now.' And that becomes just the next thing that's going to be part of the Nerdio Manager and Nerdio for Azure, whichever product that may be a part of.

So, I think the end vision of Nerdio is difficult to articulate, because I think it's difficult to articulate what IT or what cloud [will look] like in its final state. I think one is going to be dependent on the other, but it's always going to be driven by our mission of empowering MSPs to be successful in Azure.

The final vision of cloud for SMBs

Sobel: OK. Now, my final, final question, because you've opened up the door. So, let's take that quick step back. What do you think [is] the final vision of what the cloud looks like for the small- to midmarket-style companies? What do you think they're leveraging in that future world?

Vladimirskiy: I think one likely scenario is a truly SaaS-based world with very little edge device complexity. I don't want to say little intelligence because there's a lot of stuff that happens on the edge. But maybe the iPhone analogy, where you have basic devices that don't do a lot themselves, that have a SaaS-type of an approach to working with data and applications. I think it's going to be a very long transition period. I mean, it's not going to be two years. It's probably not even going to be five years. And certain segments and certain industries will transition faster; certain [ones won't]. But I think it's going to be a long transition period. And if you think about, especially in the enterprise space, if there's even one or two apps that can't fit that vision, you still are dragged down by everything else you have to do to support those apps.

About the author

Dave Sobel is the host of the podcast The Business of Tech, co-host of the podcast Killing IT and author of the book Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business. He owned and operated an IT solution provider and MSP for more than a decade and has worked for vendors such as Level Platforms, GFI, LOGICnow and SolarWinds, leading community, event, marketing and product strategies, as well as M&A activities. Sobel has received multiple industry recognitions, including CRN Channel Chief, CRN UK A-List, Channel Futures Circle of Excellence winner, Channel Pro's 20/20 Visionaries and MSPmentor 250.