Buzz Around Device as a Service Continues to Grow

This week Device as a Service (DaaS) pioneer HP announced it was expanding its hardware lineup. In addition to adding HP virtual reality products including workstations and headsets, the company also announced it would begin offering Apple iPhones, iPads, and Macs to its customers. It’s a bold move that reflects the intense and growing interest in this space, as well as Apple’s increasingly prominent role on the commercial side of the industry.

First Came PCaaS
IDC’s early research on PC as a Service (PCaaS) showed the immense potential around this model. It’s exciting because it is a win/win for all involved. For companies, shifting to the as a service model means no longer having to budget for giant capital outlays around hardware refreshes. As IT budgets have tightened, and companies have moved to address new challenges and opportunities around mobile, cloud, and security, device refreshes have often extended out beyond what’s reasonable. Old PCs limit productivity and represent ongoing security threats, but that’s not stopped many companies from keeping them in service for five years and more.

PCaaS lets companies pay an ongoing monthly fee that builds in a more reasonable life cycle. That fee can also include a long list of deployment and management services. In other words, companies can offload the day-to-day management of the PC from their IT to a third party. And embedded within these services are the ability of the provider to capture analytics that helps guide future hardware deployments and ensure security compliance.

PC vendors and other service providers offering PCaaS like it because it allows them to capture more services revenue, shorten product lifecycles, and smooth out the challenges associated with the historical ebb and flow of big hardware refreshes often linked to an operating system’s end of life. HP was the first major PC vendor to do a broad public push into the PCaaS space, leveraging what the company learned from its managed print services group. Lenovo has been dabbling in the space for some time but has recently become more public about its plans here. And Dell has moved aggressively into the space in the last year, announcing its intentions at the 2017 DellWorld conference. Each of the three major PC vendors brings its own set of strengths to the table in this competitive market.

Moving to DaaS
HP’s announcement about offering more than just PCs, as well as Apple devices, is important for several reasons. Chief among them is that in many markets, including the U.S. (where this is launching first), iOS has already established itself as the preferred platform in many companies. By acknowledging this, HP quickly makes its DaaS service much more interesting to companies who have shown an interest in this model, but who were reluctant to do so if it only included PCs. Second, while HP has a solid tablet business, it doesn’t have a viable phone offering today. For many companies, this would be an insurmountable blocker, but to HP’s credit, it owned this issue and went out and found the solution in Apple. It will be interesting to see if the other PC vendors eventually announce similar partnerships with age-old competitors. It’s worth noting that Dell also doesn’t have a phone offering, while Lenovo does have a phone business that includes the Moto brand.

It was also very heartening to see HP announce it would begin offering its virtual reality hardware as a service, too. Today that means the HP Z4 Workstation and the HP Windows Mixed Reality VR headset, but over time I would expect that selection to grow. As I’ve noted before, there is strong interest from companies in commercial VR. By offering the building blocks As A Service, HP enables companies to embrace this new technology without a massive capital outlay up front. I would expect to see both Dell and Lenovo, which also have VR products, to do the same in time. And while VR represents a clear near-term opportunity, Augmented Reality represents a much larger commercial opportunity long term. There’s good reason to believe that many companies will turn to AR as a Service as the primary way to deploy this technology in the future. And beyond endpoint devices such as PCs, tablets, phones, and headsets, it is reasonable to expect that over time more companies will look to leverage the As A Service model for items such as servers and storage, too.

Today just a small percentage of commercial shipments of PCs go out as part of As a Service agreement, but I expect that to ramp quickly in the next few years. The addition of phones, tablets, AR/VR headsets, and other hardware will help accelerate this shift as more companies warm to the idea. That said, this type of change doesn’t come easily within all companies, and there will likely continue to be substantial resistance inside many of them. Much of this resistance will come from IT departments who find this shift threatening. The best companies, however, will transition these IT workers away from the day-to-day grind of deployment and management of devices to higher-priority IT initiatives such as company-wide digital transformation.

At IDC we’re about to launch a new research initiative around Device as a Service, including multiple regional surveys and updated forecasts. We’ll be closely watching this shift, monitoring what works, and calling out the areas that need further refinement. Things are about to get very interesting in the DaaS space.

Published by

Tom Mainelli

Tom Mainelli has covered the technology industry since 1995. He manages IDC's Devices and Displays group, which covers a broad range of hardware categories including PCs, tablets, smartphones, thin clients, displays, and wearables. He works closely with tech companies, industry contacts, and other analysts to provide in-depth insight and analysis on the always-evolving market of endpoint devices and their related services. In addition to overseeing the collection of historical shipment data and the forecasting of shipment trends in cooperation with IDC's Tracker organization, he also heads up numerous primary research initiatives at IDC. Chief among them is the fielding and analysis of IDC's influential, multi-country Consumer and Commercial PC, Tablet, and Smartphone Buyer Surveys. Mainelli is also driving new research at IDC around the technologies of augmented and virtual reality.

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