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Amazon Brings WorkSpaces to the iPad (Update 1)

Stocks in this article: AMZN VMW CTXS AAPL

(Piece updated with AWS projections made by UBS analyst Eric Sheridan during the business' annual developers conference.)

NEW YORK ( TheStreet) -- Amazon Web Services (AMZN) is positioning itself to capitalize on an increasingly mobile U.S. workforce, creating an app that will allow the utilization of its new desktop virtualization service through the iPad at competitive prices.

Amazon WorkSpaces was announced at last month's AWS re:Invent 2013 developer conference, and at that time, was accessible only from laptops, Android tablets and the Kindle Fire through Amazon's Appstore. Now, it's making itself available via iTunes on the iPad, which is among the devices experiencing wide deployment at corporations.

According to Apple (AAPL), 94% of Fortune 500 companies and more than 85% of the Global 500 enterprises are either testing the device for employee usage or are already in use by employees.

Amazon has expressed confidence in a fast-pickup of its desktop virtualization service, still in testing phase under limited accessibility among existing AWS customers. The company cited as a selling point the ability of the service to allow the customers to complete projects and key tasks for their jobs remotely while giving corporate IT departments the tools to efficiently manage data all within a secure cloud. Amazon also underscored Amazon WorkSpaces' competitive prices.

At last month's conference, AWS senior vice president and keynote presenter Andy Jassy emphasized that Amazon WorkSpaces is one of the most aggressively-priced desktop virtualization services around. The basic package that consists of remote computer processing power, memory, storage and Internet browsers begins at $35 every month per user. For $15 more, customers will be able to tap into antivirus features and Microsoft Office Professional on the virtual desktop. That cost is "half the price of what the typical virtual desktop infrastructure is today," said Andy Jassy.

Neither Citrix Systems (CTXS) nor VMware (VMW) shares were taking news of the Amazon WorkSpaces iPad announcement badly, even though the product invades into their territory. VMware gained 4.55% to $83.70 and Citrix Systems added 3.2% to $60.02 on the view that having a massive player like Amazon enter the desktop virtualization market might actually be an endorsement for the entire space, snuffing out some of the lingering skepticism about the costs associated with workforce mobilization and performance delays concerns tied to desktop virtualization.

If Amazon is able to deliver on its promise for easy to manage, secure workflow execution and management with its desktop virtualization product, the payoff could be significant. Factoring in Workspaces demand, in an earlier note, UBS analyst Eric Sheridan is already predicting that AWS' contribution to Amazon's revenue will grow to $8.2 billion by 2017 from about $3 billion in 2013 and approximately $2 billion in 2012.

Follow @atwtse

-- By Andrea Tse in New York

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