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Analysts: Microsoft feeding thin client frenzy

Margie Semilof

The steady growth of the thin client market in a harsh economic climate may be the inadvertent handiwork of the fat client proponent -- Microsoft.

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    According to a recent study from International Data Corp., a Framingham, Mass., market research firm, thin clients topped one million shipments in 2001 and should climb to 1.4 million shipments in 2002.

    The market is expected to see nearly 30% compound annual shipment growth between 2002 and 2006. Windows-based devices own about three-quarters of the thin client market, and that number should be constant through 2006, according to the report.

    Customers and analysts see the growth of the thin client architecture as being driven by customer desire to control the runaway costs associated with keeping PC software in check. Though thin clients are not for every application, plenty of customers swear by their benefits.

    Keith Higley, a firm administrator at Glenn Rasmussen & Fogarty, a Tampa, Fla., law firm with 40 attorneys, said his company does a better job controlling its costs -- and its system as a whole -- using thin clients.

    The firm was using one Metaframe server from Citrix Systems Inc. but recently added a duplicate server for more capacity and redundancy. Higley said his thin clients were once handicapped by their inability to accept sound cards and sync up PDAs, but those features are available in today's products.

    Price-wise, thin clients are tough to beat -- at least for Higley's applications. He said the thin client total outfitting cost him $25,000, but with PCs "you are paying that on a regular basis because you are always swapping them out."

    Would he go back to having a PC on every desktop? "Maybe if we had a brain freeze," he quipped.

    Dan Kusnetzky, vice president of system software research at IDC, follows virtual user interface software sold by companies such as Citrix Systems Inc., Microsoft, GraphOn Corp., Tarantella Inc. and others. The server-based software is accessed by thin client hardware.

    That market, which is part of a broader market called "virtual access software," experienced a 25.2% growth in revenues in 2001, a figure Kusnetzky called "amazing" considering the overall economic conditions.

    This software market earned about $580 million worldwide in 2001 and is projected to grow to $1.1 billion by 2006. Citrix owns about three-quarters of that pie.

    Much of this growth is likely fueled by people looking to save some money and get a better lock on their computing environments. "Microsoft could be driving the expansion of this market more by what it has not done than what it has done," Kusnetzky said.

    The driving force is people seeking out cost savings, better security, simplified administration, simplified operations, fewer problems when doing software upgrades, and wishing to make it "harder for users to hurt themselves." Thin clients are usually rolled out to address those issues.

    Couple all that with Microsoft's recently instituted subscription licensing model, and a few more companies have reason to consider using thin clients.

    Microsoft wants customers to tightly manage their assets and prove that their software is current. But for many companies, that can be hard to do when there are tens of thousands of computers at different stages in their life cycles across the enterprise. Some may consider re-centralizing some computing on fewer machines.

    But thin clients will never be for everyone. Today the architecture assumes that users are sitting in one place and have access to reasonably high-speed networking. In some cases, it's simply better to have the software deployed on the PC, Kusnetzky said.

    Also, users who are accustomed to having some control over their computing environments will be reluctant to give up that control, he said.


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