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A singular approach

IGEL is ending hardware production and becoming a software-only company. James Goulding reports

IGEL, provider of a managed endpoint operating system for secure access to cloud workspaces, has taken its final step to becoming a 100% software company and ceased production of IGEL thin clients – small, low power devices that connect users to an application or a desktop running elsewhere.

At the same time, it has formed new strategic partnerships with HP, LG and Lenovo that will extend its reach and enable customers to derive more value from their investments in VDI, DaaS and SaaS solutions.

IGEL started out as a thin client vendor in the early 2000s, assembling hardware from a manufacturing partner in Asia at
its warehouse in Bremen and distributing devices with the IGEL OS to customers around the world. It became the Number 1 thin client brand in Germany and by 2017 was arguably the Number 3 brand worldwide, after HP and Dell, with annual unit sales of circa 750,000.

In 2018, to exploit the growing potential of its operating system and management platform, IGEL took the decision to de-couple its OS from its thin clients and to sell both independently so that customers could use IGEL OS on old and new devices from other vendors.

Since then, IGEL has been focusing more on software (it introduced subscription billing in the summer), while gradually scaling back its hardware business to the point where the hardware attachment rate – when the IGEL OS is sold with an IGEL thin client – is just 15% in North America and 40% in EMEA.

While thin client sales have remained significant (circa 250,000 units), especially in Germany, Simon Townsend, IGEL’s new Field CTO for EMEA, points out that the financial impact of sunsetting UD2, UD3 and UD7 devices will be minimal as IGEL had stopped assembling devices in Bremen 18 months ago when it transferred hardware inventory and supply chain management to Arrow.

“When we stopped manufacturing hardware, most of the profit that was being made on hardware was null and void. We weren’t buying the components anymore; we weren’t buying the units; we weren’t assembling them; we weren’t marking up the price and selling them on. All IGEL was doing was claiming a very, very small royalty on units displaying the IGEL logo.”

Now, even that is ending. There is existing stock of IGEL-branded devices available to buy before the end of March 2023, but once those units have sold out IGEL’s only remaining involvement with hardware will be the RMA process for supporting devices under warranty with spare parts and replacement units.

Flexibility and choice

Arguably more significant than IGEL’s exit from hardware are its new strategic partnerships with HP, Lenovo and LG, which will expand the range of IGEL-tested and certified devices from three models to 10, giving customers more flexibility and
more choice.

“If you’re an IGEL hardware customer, I can now give you an LG equivalent, an HP equivalent or a Lenovo equivalent; I can give you all-in-one devices that are typically used in healthcare and retail; and I can give you mobile devices, including two laptops each from LG, HP and Lenovo. Just last month, a healthcare organisation in the US ordered 1,500 Lenovo laptops, all direct from the factory, all pre-installed with IGEL as an operating system (not Windows), all delivered directly from Lenovo to the customer ready for them to configure and hand out to employees.”

Growth potential

Townsend argues that these strategic relationships are testament to IGEL’s growth potential.

“There are 500 million corporate desktops out there and around 50 million VDI seats. Of those 50 million seats, Citrix has around 30-35 million, VMware has got about 10 million and the rest is left to the others, including Microsoft with its cloud
PC and desktop-as-a-service. Our software is not just an opportunity to serve the VDI market with a secure operating system
but to address that TAM of 500 million desktops, where people are moving things to the cloud, applications are moving to SaaS and more of us need access to unified communications like Zoom and Teams.

“We see the need for a slim, very secure, easy to manage operating system in the corporate desktop space that provides access to VDI and to the cloud. We think that Windows on the endpoint is probably getting to the point where it’s just too big and too difficult to manage. Plus, you’ve got Microsoft telling you the best way to consume Windows is to run it as a service with Windows 365, cloud PC. The opportunity for us as a software company is far bigger than it would be for us as a thin client company.”

For this reason, Townsend expects resellers to be supportive of its new approach.

“It validates what we (and they) have been saying for a long time, which is ‘Don’t think of IGEL as a piece of thin client hardware; think of IGEL as this secure endpoint platform, an operating system that can go on any device as an alternative to Windows and provide the best, most secure and cost-effective way of getting access to a cloud-delivered workspace.

“Most resellers will continue to push the same story they’ve been pushing for the last few years around how IGEL can help secure your environment and significantly reduce your capital expenditure. I’m working with a customer who has got a budget of £50 million next year just to

There are 500 million corporate desktops out there and around 50 million VDI seats. Of those 50 million seats, Citrix has around 30-35 million, VMware has got about 10 million and the rest is left to the others, including Microsoft with its cloud PC and desktop-as-a- service

 

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