Hard-core gamers play fast-paced action games set in realistically depicted 3-D environments that require powerful graphics hardware. Traditionally, playing these games meant owning either a game console or a high-end personal computer. But a startup called OnLive created a system that allows even players with less sophisticated systems to enjoy the latest action games via a network connection. Now the company is planning to roll out the same technology to businesses so that remote workers can use demanding professional applications as if they were sitting at a powerful workstation in the office.

OnLive developed a video streaming technology that doesn’t rely on the kind of lag-inducing buffering employed by on-demand video websites such as Netflix and Hulu (see “TR10: Cloud Streaming,” May/June 2010). This makes it possible to run games in the cloud on high-performance servers and almost instantaneously stream responses to players’ inputs. It also allows OnLive to give business users access to a virtual desktop on any hardware that can display a video stream: they can launch applications and save files, just as they would with a regular desktop computer. Not only can this technology give remote workers access to office software, but it can even allow them to use the programs on smart phones and tablets, which are cheaper and easier to carry than the more powerful laptops that such workers typically use.

“We’re seeing a new market emerge that we’re calling ‘desktops as a service,’” says David Johnson, an analyst with Forrester Research. Startups such as Desktone specialize in offering cloud-based virtual desktops, and larger companies such as Rackspace are starting to provide such services alongside their established cloud offerings. With so many entrants into the market, Johnson believes that providers must differentiate themselves to succeed. Silicon Valley–based OnLive believes it stands out for the speed it offers and the fact that its system can work with a wide range of user hardware—as proven by the success of its game service, which lets players choose from a selection of popular titles and play them directly from the company’s website. OnLive launched the service in the United States in early 2009 and expanded it to the United Kingdom in September. Agreements with publishers prohibit it from giving an exact figure, but OnLive’s CEO and founder, Steve Perlman, says the service has millions of users and is rapidly adding more; the number doubled from July to September.

Just as the game service frees players from the need to buy expensive hardware, Perlman believes that business users—especially those who wish to run computationally intensive graphics-heavy applications for professional video editing or computer-aided design—will find good value in OnLive. In effect, they would rent the software from the company, which would license it from publishers.

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Even people running less demanding software will benefit from the speed that OnLive’s technology offers; end users will not notice that the program is actually running on a remote server. This means that, for example, a hospital IT department could run its medical records software from the cloud. Any software upgrades would then be instantly reflected throughout the hospital, with no need to install them on each computer. And if a computer were stolen, patient privacy would not be compromised, because the data would not be stored locally.

But OnLive’s method of enabling collaboration between widely scattered workers on different platforms could become its most significant feature. Because the output from any application running in OnLive’s cloud is a video stream, the stream can easily be sent to multiple devices, allowing workers to look over each other’s virtual shoulders.

OnLive is working with TV manufacturers on sets that could access its system directly (Vizio, a U.S. manufacturer of LCD televisions, announced the first such devices in January). Imagine “an architect who comes to a client with a tablet,” Perlman says. “The client’s got a big TV in the conference room. The architect can control the presentation of building plans on the tablet; it’s appearing on the TV; and maybe there’s a specialist back at the architect’s office on a Mac or PC.” That specialist could adjust the plans on the fly as the client asks for changes. OnLive plans to launch its desktop-as-a-service product sometime in 2012.