VENDORiQ: Betting on Cloud Desktops – Nerdio Secures USD500 Million

Why it’s Important

The investment signals a maturation of the cloud management market. With Nerdio’s valuation exceeding $1 billion, investors see significant growth potential in platforms that simplify cloud desktop deployment. This comes at a time when traditional on-premises virtual desktop players – VMware and Citrix – are undergoing market upheavals.

More importantly, the substantial investment reveals several critical industry dynamics. First, it highlights significant service delivery challenges in Nerdio’s delivery capabilities, particularly evident in the Australian market, where customer feedback in early 2024 revealed capacity constraints and service quality issues. These concerns were addressed in mid to late 2024 with Nerdio expanding local resources and MSP support, along with offering 24/7 support and more robust SLAs.

Nerdio’s client engagement also needs greater clarity to perfect the use cases and clearly articulate business benefits from its solutions and services. Even when engaging local Microsoft Service Partners with Nerdio expertise, some organisations have struggled to distinguish between on-premise virtual desktops and cloud desktops in their business cases. This suggests Nerdio needs to engage in market education and assist its partners in developing business cases.  This is not to say that cloud desktops are always the ideal solution: IBRS recommends conducting a detailed exploration of on-premises virtual desktops and cloud desktops, or a hybrid approach, when planning desktop deployments. 

The investment’s size and target areas suggest that Nerdio is well aware of its challenges and represents a broader scaling problem in cloud desktop management services. The funding arrives at a crucial time when MSPs face increasing pressure from cyber security threats, talent shortages, and rising operational costs. Nerdio’s focus on expanding its engineering and customer success teams indicates its ongoing shift from a pure platform play to enhanced service delivery support and building a stronger partner network.

Similar investments in cloud management platforms have shown mixed results. Other platforms like Emma have struggled to translate funding into immediate service improvements. Nerdio’s approach of strengthening its support and (ideally) partner network rather than pursuing acquisitions represents a different strategy, betting on organic growth and partner enablement.

Who’s Impacted

• Cloud operations manager: Prepare for potential service delivery improvements and new management features in Azure services and, if used, Nerdio’s platform.
• Procurement manager: When planning future cloud desktop management services, evaluate current MSP partnerships and carefully review Nerdio’s partner network.
• End-user teams: Review the use cases for on-premises virtual desktops versus cloud desktops. Monitor Nerdio’s local service delivery improvements and assess the impact on current cloud management operations.

What’s Next

• If your organisation is leveraging Azue desktop services, monitor Nerdio’s partner network improvements in your region to ensure service delivery meets expectations.
• Review and update on-premises virtual desktop cloud management budgets versus cloud desktops and consider features and services that may emerge in the cloud.