Scott Manchester on Why Cloud-Based Virtual Desktop Adoption Will Surge in 2026

Hey guys, thanks for the throw. We're here with Scott Manchester, newly appointed chief product and technology officer for nio. And well, we're having a little chat about how it is gonna be managed going forward in the agent of the cloud, and maybe with virtual desktops and all kinds of fun stuff.

Scott, welcome Michelle. Thanks. Good to meet you, Mike.

Historically, we've always seemed to have managed desktops in the cloud separately, even when the same team is managing 'em, they think about them separately. And I guess I'm wondering, after all this time, are we on the cusp from what you see as to maybe some actual convergence here and what might drive that? Yeah, certainly.

I think, you know, as you've seen the evolution of VDI, uh, moving to the cloud, um, we call that cloud VDI, where it kind of holds to those previous constructs of traditional management of VDI, sort of a separate environment from your physical estate to the innovation that came forward with the cloud pc, where it was a very intentionally name and it named a cloud personal computer. And the concept is that it carries forward all those same constructs and how you manage, uh, how you set security baselines, do Windows updates, app deployments, and doing it in a way that's consistent between the physical world and your new cloud-based computing environment. And I think that, uh, thinking of those as a single concept certainly gives back a lot of time and energy to it.

So they're not managing two different workflows, but also has a great value of reducing their security footprint and just giving, you know, more structure to how they manage an environment that has less risk of human error as well. We've been talking about virtual desktops for as long as I can remember, what will kind of finally push people towards them in greater numbers than we've seen thus far. It seems like, you know, at least it, it looks like the right way to go from a computer science perspective, and yet we still see a lot of traditional desktops out there, so what's gonna move the needle?

Yeah, that was a question I asked myself about a decade ago. Um, you know, leading the business at Microsoft for so long and really starting to see what that growth looked like and trying to understand why it hadn't had higher penetration for those customers that had deployed it, you could see the incredible value that it gave to them, you know, that simplicity of spinning up and spinning down resources when they needed the extra layer of security. But the devil's in the details with this type of technology, right?

And there are certain, you know, I'll call 'em quirky behaviors of traditional VDI, uh, that often lead to complex management, uh, and the overhead, you know, when it's not managed in a consistent way and you add that complexity, that overhead sometimes outweighs the value of virtualization. And then there's just the general understanding of it. You know, we've had like com, you know, pc, physical PC based computing environments for, you know, five decades now and four decades of windows, and it's just what people are familiar with and accustomed to.

So trying to, you know, bridge the gap between everything on physical and everything cloud and finding tools, processes and value in between there and helping people start to understand that value. So it's closing the gap on the complexities, but also helping customers understand the value. And I think we saw a major inflection point just a few years ago, obviously, uh, with COV and then many organizations being forced to quickly adapt to an environment that allowed people to be productive outside of the office.

It was a great awakening of the value of virtualization, and I think we saw some explosive growth that hasn't subsided, right? You saw this huge pickup of people really looking into virtualization. But then organizations have gone through these migrations from all on-prem, all in the cloud, uh, everybody at home, everybody in the office, hybrid work.

All these inflection points are a reminder that things are not stagnant. And having environments that allow flexibility, flexibility in where your workforce is, the needs of your workforce, global demands, all of these things. Um, so I think we're definitely in an era where that growth of desktop virtualization that we saw for three decades is now at a much higher pace than ever before.

Um, you mentioned you were at Microsoft, so what brought you to nerdio? What was the attraction there? And kinda, there's a lot of players in the space, so what differentiates Nerdio in your mind?

Yeah, I think, you know, we first started down this adventure of Microsoft having first party solutions in this space, both our cloud VDI product, Azure Virtual Desktop, and our cloud PC product. I came into that, um, mindset of building those products with a partner strategy in mind. Meaning there's certainly core value you want to have in the solution that customers don't feel like they need third party tools to have a viable product.

But having partners and an ecosystem of partners out there who can enhance fill gaps, build specific needs for different verticals was something that was gonna be clear. NIO just happened to be a second partner that we signed up as a value added partner, uh, in the early days of Azure Virtual Desktop at that time, they were a pretty small organization with just a handful of people, uh, but clearly had a very good understanding of the needs of organization and the vision to understand that that Azure Virtual desktop, our cloud VDI product was gonna be transformational. Uh, it was a product that kind of fit right in between the needs of organizations and that price point that customers were looking for to make those economics work.

You asked about earlier. And I immediately was impressed, uh, with Nerdio, both Joseph and Vadim, uh, and their understanding like the needs of customers. Joseph had just come off, you know, a long tenure at Microsoft as well, and Vadim had great expertise in building managed services for organizations and right off the bat, uh, seeing the, their willingness to take on a very complex, uh, feature ad for Azure Virtual Desktop, which was building the entire GUI to wrap around the management framework.

And they did that so quickly, and the reception to it was just phenomenal. So the last, it's been a little over seven years now, I think, uh, working side by side with them continuing, you know, as we now brought a GUI forward, uh, for a VD nerdy has continued to evolve and continue to build value out in front of what we've done. Um, but getting that chance to work side by side with them for so long, I think the choice for me is pretty obvious, uh, where to go next.

Um, why, uh, now, uh, this little timer here in front of me is counting down to two more days until my 25 year anniversary at Microsoft. So, as with many people that come into a large company like Microsoft, you're not quite sure how long you're gonna stay at an organization like that. Um, and you know, my plan originally was maybe two to five years, and here I am 25 years later, you know, it's just an amazing experience.

Uh, I felt nerdy was the right, uh, company and 25 years was the right time, uh, to go out and, and continue to innovate and build value for customers in this end user compute space. All right, sometimes you gotta find your joy, right? I'm, so what is your sense of how much of it is gonna be managed by these kind of third party managed service providers versus an internal IT team?

As we go forward, I feel like there's more collaboration, but when I look at the numbers, it's still about maybe a quarter of IT is consumed as a managed a service and the rest of it is still managed directly by some internal IT team. Generally speaking. Is that the way it's always gonna be or is there gonna be a change?

You know, it's interesting. I see customers moving in both directions where maybe they've managed all their internal IT before and are now looking to, you know, outsource that a bit. Um, as they go through these inflection points of on-prem cloud and then maybe even full cloud pc, I think each of those are times for them to evaluate, you know, is this best suited for us to manage ourselves?

Uh, should we work with one of our current, uh, SI partners? Do we work with a full MSP? Um, I think many organizations are just shifting around as it meets their specific needs.

I think at the end of the day, IT departments wanna spend more of their time looking out into the horizon and less down at their feet. And what I mean by that is, when you're looking down at your feet, you're implementing the technologies that you've already purchased, you know, the things you've, you've bought, you've made a decision, this is the tech. But when you're spending all your time working on implementing the tech you have now, and you're not looking out at the horizon, you're missing major inflection points, like this new generation of AI tools that could completely streamline your organizations.

So what I see organizations doing is saying, I want to get my IT department more focused on new horizons, new opportunities to make us more productive, lower cost, increased productivity, and less time spending implementing technologies we've already bought. So nerdio kinda is that sweet spot of saying, well, we can provide more, you know, um, management tools to produce the overhead of your IT team or can give you even the opportunity to have nerdio be the tool that an MSP uses to manage that customer. So I think they're just situated really well to capture whether you're moving towards managing your own environment or you're moving away from IT, or nerdio, uh, suite of tools I think is just well positioned for all of those movements.

Mm-hmm. You mentioned ai, will AI kind of drive some of this convergence we were talking about before in terms of how it is managed? Because it seems like the workflows will become more automated and there'll be less maybe unnatural delineation between various platforms.

So is is that part of that inflection point you were talking about? A little bit, yeah. But you look at even ai, how fast it's evolved, right?

Imagine if you said, okay, ai, I've got this eight new AI tool, we're gonna implement it and then we're done with ai, right? So my IT department can all just go home and, uh, take a vacation when in reality, even these IT tools are evolving so quickly, you need to constantly be evaluating these new tools, uh, these new capabilities. So AI will certainly, uh, simplify every aspect of the enterprise workforce.

You know, whether that is, you know, um, general content creation, um, whether it's improving workflows or whether it's providing additional tools to help you manage your compute infrastructure. Um, it's gonna have an impact on all of those things, but it's not a one and done. It's a constant evaluation of these new tools, constant determining what's the right AI services and tools for my organization.

So I think it's gonna just keep moving the needle, uh, in terms of what the role of the human is in all of this equation. And then what are the right tools that help organizations take these AI tools and manage them. Uh, Microsoft made a big announcement at Ignite that really moves the needle forward and then creates a great ecosystem of partners around this, which is giving AI tools and identity, um, that was Agent 365 that was announced at at Microsoft Ignite just a few weeks ago.

And then be able to take those tools and those agents and put them to purpose, right? So you've got new tools that are both applicable to the virtual estate, and there was a couple of other announcements, uh, AI enabled cloud PCs, AI tools, uh, that can be consumed inside of a cloud pc. So AI is having major opportunities to streamline organizations, but then creating new opportunities for IT departments to put these AI tools to bear inside of their virtual estate.

One of the things that I've heard from IT people over the years is, yeah, they have left to their own druthers, would love to use virtual desktops, it makes their life easier, but they have a hard time convincing the organization that that's the way to go. And it has to do with cultural issues more than technical issues. And in some ways, sometimes desktop virtualization, at least historically, has had something of a bad rap rap among some end users.

What's your best advice to those folks about how to kind of get the rest of the organization on board for this? Yeah, certainly, you know, with 30 years of evolutionary innovation, it's like, you know, boiling a frog, it's hard to really know how much virtualization has changed since that last time you looked at it. So if you're A-A-C-I-O or CTO within an organization, and perhaps you looked at virtualization a decade ago and yeah, it had some value, but the overhead and the value equation just didn't make it worthwhile for us.

And then with slow innovation, there's nothing major enough for them to go back and look at it again, with the introduction of both Cloud VDI, uh, lowering the cost threshold for organizations where most enterprises already have the entitlements to supporting Azure Virtual Desktop, for instance, without having to go buy some expensive license from another third party that opened up the door. And many organizations now said, okay, let's take another look at virtualization because this cost has reduced significantly. I already have the entitlements through my Microsoft licenses.

And then cloud pc very disruptive, uh, a revolutionary innovation in the virtualization space. That kind of leans into some of the things you're identifying, Mike, is that experience, that end user experience. Can you grab a random person off the street, put 'em in front of this environment and have them be productive?

I'll use another example from Ignite since it was such a, um, recent moment, um, where a lot of this, these type of topics were discussed. I brought up one customer on stage, uh, that had been, uh, working with us since the early days of A BD and now to cloud pc. They cycle through 3000 contractors a month.

So 3000 offboard and 3000 onboarded. And with traditional virtualization, you can imagine where you'd take specialized training to, to get that new contractor familiar with the differences of computing on a physical device and computing out a virtual estate, the overhead of that 3000 times every month wouldn't be worthwhile with Cloud PC and the innovation we've been driving at Microsoft and the value add nerdio wraps around it, it is really designed to be your personal computer in the cloud and it looks, feels and operates like a physical PC and all of the things that humans do when they interact with a physical PC to self remediate problems, right? We all know how to hit the restart button on our pc.

Imagine this Mike, 30 years of evolutionary innovation in the virtualization space. Nobody gave the user the reset button. So every time you put somebody in a virtualized environment and they got into a bad state, someone had to get on the phone, someone had to go in the backend and restart that machine.

That alone, it just seems like such a simple thing. But that alone was one of the major deployment blockers just doing a simple phase of restarting your machine. Humans couldn't do on their own.

They had to engage with an IT support person. It's just one of many little quirky behaviors that we've closed that gap on now. And given that user the ability to restart their machine and do even more actions that they've become, become familiar with in the physical world, uh, and when you can lower the IT overhead in that same stage, uh, we shared, uh, a couple other customers shared some statistic moving from traditional virtualization to cloud PC reduce their support tickets by 86%, but those are data points that many organizations haven't felt yet, right?

They, they're not aware just how fast things have changed and how far they've come since the last time they looked at it. So get to your original question. I think it's just a matter now of getting out and letting organizations know, you know, things have evolved significantly since the last time you looked at it and getting some of these large customers and different verticals tell their stories of how it's transformed their, uh, operations made things more secure and lower the costs.

Uh, it's starting to resonate. So we're seeing, you know, customers maybe that have been resistant to this now really embracing virtualization and doing it at scale. Mm-hmm.

You mentioned security, so are those folks also starting to weigh in on this conversation? 'cause you know, we're all familiar with Patch Tuesday and nobody's having a great experience per se, but um, yeah. Are the security people starting to show up and say, folks, we need a better way to manage all this stuff.

'cause that endpoint is really, you know, among the weakest links we have because well after the people that comes next. Yeah, and I think virtualization has always been, you know, a tool that security would, would implement to sort of separate, you know, the corporate environment data, uh, from the physical device. So with the traditional virtualization, I log in from, uh, a thin client device or a Windows device or an Android iOS device into the corporate environment through a virtualization application.

And when I'm done, nothing is left behind. That's one of the value props is creating that security boundary, getting it implemented in a way where you can guarantee nothing's left behind and guarantee that that thin client device or that thick client device that's connecting to the service also hasn't been compromised. That's where the real next wave of innovation is really closing the gap on security and creating brand new security opportunities that, um, were not able to be realized in the virtualization environment of the past.

Things like mobile application management where you can do attestation or posture checking of a physical device and ensure that it meets all the corporate requirements even without being managed. That means it can be A-B-Y-O-E device, my personal device that I'm connecting to the service from. And I think these types of technologies now are opening the door where even the highest level of security government agencies, healthcare, financial services, are now embracing virtualization because it provides that extra layer of security and can be done in a way that's more economical than traditional fiscal computing.

So what is that one thing? I mean, you know, you've been doing this for a while, but is there something you see people doing today that just makes you shake your head a little bit, go, Hey, you know, folks, maybe we could be just a little bit smarter than that and if we are focused on the following? Yeah, I'd say certainly it is, um, understanding when your workload would be better served from the cloud is sort of a general concept.

Um, going into this 2026, I kind of view this as a year of the great migration, uh, that migration from on-prem to the cloud, from legacy virtualization solutions to modern virtualizations solutions, from services that you're paying for in addition to license that you already have through Microsoft. Uh, all of these are new opportunities for migration. Nerdio has been building an amazing platform to support these migrations, whether it is understanding the needs, uh, of individual users and what's the best service to support them.

This is one of the things they announced at Nerdio Con in May. Uh, the ability to migrate users from, uh, Azure Virtual Desktop to Windows 365, but even more importantly, to identify the economics and value of that move, and you actually giving a real word, metrics of moving that. So I think going into this year, being helping organizations see the light you had mentioned earlier that, you know, how do you, you know, drive this innovation of virtualization when maybe it has a bad taste for some organizations, right?

I think understanding that things have changed and giving them the tools to see those insights, and then the tools to just click a button and migrate from whatever their, their current environment is, whether it's a third party virtualization solution, whether it's physical PC computing, or whether it's in their own data centers to the cloud, but not just tools that just say, look, I'll move it when you're ready, but to even tell you when it's the right time to make those moves from an economic security and value prop, uh, point of view. All right, folks, you heard it here. We all know what they say about doing the same thing over and over again and expecting a different result.

So maybe it's time to consider your options. Scott, thanks for being on the show. Thanks, Mike.

All right, and back to you guys in the studio.