NComputing raises $21.8M round as desktop virtualization drives computing costs lower

NComputing, a desktop virtualization and thin-client computing firm that is driving the costs of operating computers toward zero, has raised $20 million in a new round of funding.

In February, the maker of thin-client shared computers announced a system that allowed three times as many users to work on a single machine at a third of a cost of a personal computer or typical thin client. The M300 3-in-1 Thin Client Kit exploits several innovations including version 2.0 of NComputing’s Numo chip (which essentially packs the capability of three computers on a single chip).

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QuestMark Partners led the round. Existing investors (Menlo Ventures, Scale Venture Partners, and Daehong Technew) also contributed. To date, NComputing has raised $57.8 million. NComputing is attacking what Gartner believes is a $65.7 billion market for desktop virtualization by 2013.

Redwood City, Calif.-based NComputing’s thin clients use a single PC or server that acts as a host. The host machine carves out time slices for each user, like the old mainframe computers which performed tasks for different users one after another, allowing many users to share one machine. The machine built around the ARM-based A9 Numo 2 chip lets three people use the same machine simultaneously at one-third the cost, one-third the power, and one-third the networking ports compared to traditional thin clients.

“It’s about lowering the cost of computing,” said Raj Dhingra, CEO of NComputing, in an interview in February. “This is changing the game for thin clients.”

NComputing is targeting its products at classrooms, labs, libraries, shared offices, business centers and call centers. In the first quarter, revenues grew 34 percent from the previous quarter. The company is collaborating with Citrix Systems and plans to introduce new enterprise-focused offerings in the second quarter.

“Our strategy to disrupt legacy economics and make high-performance yet low-cost computing a reality is being validated by customers every day,” said Raj Dhingra, chief executive of NComputing.  “We are now the world’s largest independent company in the virtual desktop category, and the timing to expand to the enterprise market is perfect. NComputing will soon bring breakthrough economics to the world of virtual desktop infrastructure, allowing customers to more fully and easily capture the benefits of virtual desktops and apps.”

The M300 leverages the Numo 2 chip (designed by NComputing) to support three users on a single Ethernet port using a single power plug. And it also uses the latest incarnation of the vSpace server software, which now supports up to 45 concurrent desktop sessions on a single host PC or server. Together, these technologies enable the M300 to lower costs of acquisition and energy consumption by more than 75 percent. It also cuts networking costs by 67 percent and can reduce support expenditures by up to 75 percent. Information technology professionals can install it in a matter of hours.

NComputing’s technology now reaches more than 20 million daily users in 140 countries. It has 50,000 customers and competes with rivals such as Hewlett-Packard and Wyse, which was recently acquired by Dell. NComputing is gaining more business and commercial customers.

Young Song and Klaus Maier founded NComputing in 2003. Stephen Dukker, former chief executive of eMachines, joined them in 2006. Dhingra signed on with the company last year and replaced Dukker as CEO. NComputing has 200 employees.

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“NComputing is a disruptive and transformational force in the desktop client category and the only company providing a range of complete end-to-end solutions,” said Jason Sydow of QuestMark Partners.  “The VDI market is rapidly approaching an inflection point and NComputing is uniquely positioned to take advantage.  With its strong value proposition, the time is right to scale resources to extend the company’s leadership position.