VDI is a term coined by VMware that has kind of taken hold as a catch-all phrase for virtual desktops and in some cases blades. So lets use VDI in the generic sense here of desktop operating systems hosted on VMware, or Xen or a Xen player like Virtual Iron or even blades.
In any of these cases VDI (architecturally speaking) still looks like terminal services. A remote client uses a protocol to view the desktop (generally Windows) and in turn sends its key strokes and mouse input to the remote OS. The difference with VDI (when compared to terminal services) is that clients/users are not sharing an OS. This can be good and bad. The good part of this architecture is that it allows for more control for the user. The user can have elevated privileges on the machine and perhaps can run applications that needed this unrestricted access. On the Terminal Server side the OS (operating system) was shared therefore giving all the users admin rights to the server was a really bad idea.
In addition to the elevated privileges thing, the single OS concept allows organizations to host applications in a centralized fashion that could not run in Terminal Server environments (another big plus). Of course, this comes with a price. Sharing an OS has a number of advantages. You can use and pay for one OS, patch, manage, and install apps on OS. You lose these advantages with VDI. Also a shared OS is much more efficient from a resource stand point since only one OS instance is loading per machine if you run a TS (Terminal Server) server hard and compare it to a VM (virtual machine) host running desktop OSes hard with the same applications, VDI does not get the ratios of users to servers that terminal services does.
In any case I don't see VDI, or DDI (Citrix's term) or blade PCs as a Terminal Server replacement. I see it as another tool in the inventory. More than likely a large shop will have a use for desktop VMs, running right next to terminal servers, and maybe have some blades thrown in. It all comes down to money. VDI is the sexiest thing on the street right now for a lot of vendors. But the reality is that it is still cheaper to run users on terminal services, and if you don't have a need to run VDI specifically why pay more to do essentially the same thing. If you do have a need, you now have a tool to fit that situation.
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