VDI isn't much different from server virtualization—abstracting the OS from the hardware and separating multiple instances onto the same physical hardware via a middleware layer, called the hypervisor.
The difference lies in management techniques and features, such as resource pools and connection brokers. For example, the Remote Desktop Protocol, or RDP, enables users to access resource pools or reserved static desktops from physical workstations or terminal devices. And while similar to Citrix or Terminal Services in some respects, VDI replicates a user's desktop experience, isolates users from one another, encapsulates resources for easier management and increases information security.
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Whether you're better off using VDI versus a conventional hosted desktop depends on what you're trying to accomplish. VDI will provide the most benefit if your focus is improving management and centralizing resources. Citrix or another application-centric infrastructure will get you the biggest bang if you're concerned primarily with deploying applications to a large number of users but maintaining few instances. And of course, both can co-exist, each addressing its own niche.
As for vendors, VMware, Hewlett-Packard and IBM all have desktop virtualization plays, as you'd expect. What may be surprising is that Citrix has a story to tell, while Microsoft does not, unless it changes course on Longhorn's virtualization capabilities.