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Citrix, VMware slump again as sell-side mulls Amazon's impact

  • Several analysts argue Amazon's (AMZN +3.1%) cloud-based WorkSpaces PC virtualization platform could prove to be a long-term threat to Citrix (CTXS -5.4%) and VMware's (VMW -2.9%) on-premises offerings.
  • Nomura notes WorkSpaces is initially focused on SMBs, who tend to shy away from expensive on-premises deployments, rather than the enterprises Citrix derives a large portion of its sales from. But it still thinks the platform could become "a serious and broader-based competitor if it ends up vying for larger enterprises." Jefferies, meanwhile, calls WorkSpaces attractively priced and a threat to the majority of Citrix's business.
  • Stifel is defending Citrix. The firm argues Amazon is "targeting the low-end of the DaaS market as it doesn’t offer the full range of features (or deployment options) that Citrix’s desktop solutions offer." It's worth noting many cloud-based apps/services initially targeted SMBs before gradually moving upmarket.
  • Also: Amazon has launched AppStream, a service that allows apps hosted on its cloud infrastructure to be streamed to mobile devices (and perhaps eventually PCs). The service could end up acting as competition for Citrix and VMware's app virtualization platforms.
  • In addition to Amazon, Cisco's guidance is likely pressuring Citrix and VMware. Citrix and Cisco have an application delivery controller partnership, and VMware (though competing with Cisco in some areas) maintains a multi-faceted software alliance with the networking giant.
  • Last month, VMware bought Desktone, developer of a PC virtualization platform than can enable cloud-based services. VMware has promised to cross-sell Desktone's platform to its 11K service provider partners.
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