On Monday, IBM (NYSE:IBM) launched the Virtual Desktop for Smart Business, a new workforce mobility offering that provides anytime, anywhere access to personal desktops from mobile devices — including tablets, netbooks, laptops and thin clients.  IBM’s offering has come at a crucial point as desktop virtualization adoption picks up among businesses. While the market is already dominated by competitors like VMware (NYSE:VMW) and Citrix (NASDAQ:CTXS), we believe IBM’s brand recognition and large network of business partners will help its easy-to-use and well-priced product to gain share in the desktop virtualization market.
We currently have a $185 Trefis price estimate for IBM’s stock, about 14% above market price.
IBM Targeting Midsize Businesses
IBM plans to offer virtual computing solutions to smaller companies, giving these companies greater agility and lowering bot the cost and complexity of managing their PC environment. IBM Virtual Desktop (VDI) will allow Windows or Linux desktops to be hosted and managed centrally, enabling rapid deployment of new applications, automatic software updates and a reduction in help desk requests.
While similar solutions are being offered by market leaders VMware and Citrix, IBM is betting on the ease of use and pricing of its product. IBM’s solution has self-configuring, self-managing and self-protecting features enable easy installation and management, and can be administered via a web interface. Another advantage IBM seems to have over VMware is that its products’ pricing at $150 per user (annually) is lower than VMware’s starting price of ~$180 per user. 
Also, the fact that IBM’s VDI solution can either be hosted in the customer data center or through an IBM partner’s private cloud environment should facilitate adoption. IBM also has many midsize businesses as clients, which typically lack the IT resources and time required to manage a traditional PC environment.
We believe these factors could help IBM become a prominent player in the rapidly growing market for desktop virtualization solutions, which some estimate could reach $1.5 billion by 2014. 
Drag the trend line in the modifiable chart above to see how various trends in middleware license revenues could affect IBM’s stock value.Notes: