MSPs are grasping the implications of the new Microsoft Managed Desktop (MMD), its desktop as a service that includes a PC shipped to users with the customer’s system image and around-the-clock management, all bundled into a monthly subscription.

The new MMD service, announced just prior to last week’s Microsoft’s Ignite conference in Orlando, Florida, was quietly under development for 18 months by an organization led by general manager Bill Karagounis.

Initially, the service will combine Surface PC device as a service with select PCs provisioned, managed, patched and supported by Microsoft technicians. The devices will include Microsoft 365 Enterprise, the subscription-based bundles of Windows 10, Office 365 and Enterprise Security + Management (EMS) cloud service, rolled out a year ago. Over time, Dell and HP, which have their own new desktop as a service offerings, will offer MMD.

Microsoft is not the first managed desktop as a service. In August, VMware announced a Dell-managed service based on its Worskspace One managed desktop platform and HP extended its desktop-as-a-service offering. The companies haven’t yet said how they’ll reconcile these offerings with MMD.

The bundle of Microsoft 365 with the service will provide security updates, backup and many of the new features added to the bundle at last week’s Ignite conference. It will also use telemetry to provide AI and analytics, designed to improve the service’s capabilities over time.

“MMD relies on the power of Microsoft 365, running in a consistent, lightweight reference architecture that continues to evolve to allow our customers to take full advantage of our intelligent security capabilities to protect them from nascent threats,” Karagounis said in a post announcing MMD. “Importantly, MMD is built on modern devices that meet our specification and run-time quality bar.”

In a presentation to customers at Ignite, it was emphasized that the service is operated by Microsoft.

“We have Microsoft-staffed help-desk people that will be taking calls from customers to work through hardware and software issues and we are able to work backward through your help desk as well, and we can do that over the phone as well as via chat,” said Windows senior product marketing manager Nathan Mercer.

Depending how much traction MMD gains, the service raises questions for how it will impact MSPs and other solution providers that offer desktop-management services in the future.

“Anything that takes away from any potential business on my side, I’m never going to be too happy to hear about,” said Warren Tsang, a partner with LogicShark Consulting in New York. “Am I surprised to hear about it? No, because I think things are headed that way anyway.”

Indeed, many Microsoft partners, notably MSPs, are concerned what MMD will mean to their businesses, according to Larry Walsh, CEO and chief analyst at the 2112 Group.

“Managing endpoints, and particularly Windows PCs, is a core part of their offerings, Walsh noted in a blog. “The average partner earns as much as 50 percent of its revenue through services — both professional (provisioning and customization) and managed (remote monitoring and management). Microsoft offering a service that’s wedded directly to the underlying operating system is a threat to MSPs large and small.”

Patrick Moorhead, chief analyst and founder of Moor Insights and Technology, said he can see why some partners would be upset, but just like Office 365, they can still retain the interface between Microsoft and the customer, he said in an interview during Ignite.

“While the partners might not be doing all of the services, they can still make money and own the relationship,” Moorhead said. “Quite frankly, if the channel already has the business, their customers, presuming their satisfied, are probably not going to want to switch.”

Peter Fidler, president of New York-based WCA Technologies, agreed that there are striking similarities to the fears stoked when Microsoft launched Office 365.

“We embraced it as an opportunity that would help our clients to take their mission-critical email and put it in the cloud,” Fidler said. “We will also embrace this opportunity.  If you have a trusted-adviser relationship with the customer, then this is not a threat. This will have an impact on some of the managed-service tools we use to support our customers.”

Karagounis has indicated that the plan calls to enable partners to offer MMD.

“As we expand the offering, our partners will play a key role in helping us bring MMD to market and support customers in their transition to a modern desktop,” he noted.

Besides the two large OEMs, service providers Accenture – and its Avanade subsidiary – DXC, Computacenter and HCL, are the first partners that tapped to bring it into their own services. DXC will serve as a delivery partner for MMD as part of its own MyWorkStyle service, according to Ali Shadman, the system integrator’s CTO for digital transformation and workplace mobility.

“Microsoft Managed Desktop offers the complete vision for modern desktop delivered as a service,” he said.