Enough About AI. Nerdio’s Still Excited About the Cloud

I’m not certain, but I believe the first time I met Vadim Vladimirskiy was in early 2017. ChannelPro, where I worked at the time, was hosting a conference in Chicago, which also happened to be the hometown of a vendor that had recently begun sending me press releases about a new and frankly obscure product called Nerdio.

To be honest, it was Nerdio’s (still) amusing name that first caught my eye. The more I learned about the company, though, the more interested I got, so I sent Vladimirskiy—then a total stranger—an email asking if he’d be willing to drive out to ChannelPro’s event site near O’Hare and talk with me about Nerdio for a while.

To my surprise, he said yes. I’ve been watching Nerdio and the MSP opportunity in Microsoft’s cloud grow up together ever since.

We’re all pretty familiar with how much the cloud market generally has grown in recent years. Gartner expects global spending on public cloud services to climb 20.4% to a little under $679 billion this year, on its way to more than $1 trillion by 2027. And we all got fresh evidence of how good the cloud has been to Microsoft more specifically two weeks ago, when the company reported 17% year-over-year growth in commercial Office 365 revenue and 20% growth in sales of Azure and other “Intelligent Cloud” services during its most recently concluded fiscal quarter.

Nerdio’s growth has been pretty impressive too though. In something like five years, it’s gone from influencing approximately $1,400 of Azure spending, according to CRO Joseph Landes, to some $225 million just in 2023, via more than 1,000 partners and over 3 million users worldwide. Both revenue and headcount doubled last year alone.

Vladimirskiy (pictured) sees plenty of room for further growth, moreover, for Nerdio and MSPs alike.

“Obviously, productivity software is fairly saturated—everybody has M365. But from an Azure perspective, and Defender and security, there’s a lot of white space for MSPs to go after right now,” he told Channelholic during the vendor’s NerdioCon event in the Dominican Republic this week. “I don’t think that’s going anywhere anytime soon.”

Yet even as the cloud market keeps growing, so do Nerdio’s ambitions. A company that not long ago defined its mission as helping MSPs manage and profit from Microsoft’s cloud stack now aspires to help MSPs manage and profit from Microsoft’s…everything.

“It’s to create a unified management experience across a broad set of technologies that Microsoft offers,” Vladimirskiy says, and in the process turn Nerdio Manager for MSP into the RMM replacement the company believes modern MSPs need.

NerdioCon has been a great venue for watching that vision come to life. It was during that show two years ago that the company introduced virtual endpoint management. One year ago, it added physical endpoint management. This year, it was application management, which according to Vladimirskiy is the logical next level up the stack from endpoints.

Significantly, he notes, we’re not talking about cloud applications. “These are traditional Windows-type apps or mobile device apps that actually get installed [on endpoints], so not SaaS apps,” Vladimirskiy says.

Michael Goldstein, for one, likes how Nerdio’s platform is evolving. Cloud solutions and endpoints, he notes, are inseparably dependent on one another.

“If that endpoint isn’t working, I can’t get to the cloud,” observes Goldstein, president and CEO of LAN Infotech, an MSP and Nerdio partner in Ft. Lauderdale, Fla. Consulting one tool instead of several to diagnose whether it’s a device problem or a cloud problem keeping that endpoint from working saves time and money.

Of course, the closer Nerdio’s platform gets to being a next-gen RMM surrogate for next-gen MSPs, the deeper Nerdio will find itself in a crowded market that includes industry heavyweights like ConnectWise, Kaseya, and N-able, all of which are adding cloud management capabilities to their portfolios, and born-in-the-cloud vendors like Augmentt, CloudBolt, JumpCloud, and SkyKick. Almost of all of those companies support Microsoft 365, moreover, something Nerdio, somewhat surprisingly, doesn’t do.

Or at least not yet. The company will devote a lot of attention this year to incorporating support for Microsoft’s family of Defender security products (beginning with Defender for Endpoint, per an announcement at NerdioCon this week). According to Vladimirskiy, rolling M365 solutions into the platform as well is next on the roadmap.

“Think of things like OneDrive and Teams and Exchange and SharePoint,” he says. “All of those things need management and they’re all managed in different portals, and what we’re really good at is consolidating that management and making it easier.”

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Nerdio on AI: Tomorrow’s opportunity for MSPs, not today’s.

Nerdio is really good at something else too, an approach to platform extension I think of as “W-DIY,” as in “why do it yourself?”

Rather than write its own endpoint management software from scratch, for example, the company integrated with Microsoft’s Intune solution. To add app delivery management, similarly, it leveraged Windows Package Manager. And to add RPA functionality it forged an alliance pact, announced during this week’s show, with hyperautomation hotshot Rewst (a vendor that regular readers have heard about here before).

No surprise, then, that the AI capabilities Nerdio introduced during NerdioCon are largely based on native capabilities in Microsoft Azure. What’s perhaps more surprising, at a time when most vendors are furiously talking up new AI features, is the relatively understated tone the company struck when unveiling those features, which aim to help MSPs with important but time-consuming tasks they hate and therefore neglect, like testing endpoint image backups.

“MSPs don’t tend to do that as often as they should,” Vladimirskiy says, “but if AI can do that restore and can validate that it actually worked and the server booted up and successfully logged in, that would be something that’s valuable.” Same goes with an AI-powered feature that alerts technicians about customer PII found in logs and other places it shouldn’t be.

Vladimirskiy certainly dedicated some time to those features, and others like them, during his keynote Tuesday morning. But not a lot, and not with much enthusiasm. The reasons why became clear during my interview with him later in the day: At least in the realm of managed services, Vladimirskiy believes, AI’s time is still to come.

“AI has been very hyped up, but I’m not sure MSPs have identified a business opportunity with it yet,” he says. “They could start reselling Microsoft 365 Copilot, but there’s not a lot of value to add on top of it yet. So I’m not sure they have a good strategy around [AI].”

Not everyone agrees, but Canalys analyst Jay McBain (pictured), who keynoted at NerdioCon yesterday, does. “I think we actually have a couple of years before there’s material opportunity for us to go and engage at the customer side,” he said, noting that most of his audience has fresh memories of disappointing hype cycles for everything from IoT and the metaverse to 3D printing and drones.

“We’re a little bit cautiously optimistic, but no one is dumping their current business model and going all in,” McBain said of AI.

Until they do, and until they encounter roadblocks that AI itself can overcome, Nerdio is going to study AI and acquire AI skills but invest the bulk of its energy elsewhere.

“That’s sort of the core philosophy,” Vladimirskiy says. “Doing technology for technology’s sake may be cool, but it’s not useful.” And being useful to MSPs in specific, tangible, immediate ways, Vladimirskiy and Landes alike both firmly believe, is what has propelled the company’s growth.

Oh, and about Microsoft Copilot

For the moment, Nerdio doesn’t yet see it generating demand among MSPs for the kind of deployment and administrative assistance the company provides for other Microsoft services like Azure Virtual Desktop and Windows 365.

“There’s very little management required for it right now,” Vladimirskiy says. “Once it becomes a little bit more robust and flexible and MSPs are going to be able to build services on top of it, I think that’s when it’s an opportunity for Nerdio to make that process easier.”

In the meantime, don’t be surprised if Nerdio borrows the Copilot moniker for a forthcoming AI companion of its own.

“It’ll probably be some sort of a Nerdio Copilot,” Vladimirskiy says. “We haven’t figured out exactly what that’s going to look like or how it’s going to be branded, but it’s going to be a suite of tools at some point in the future.”

Time for an exit?

Given Nerdio’s impressive growth arc, are they thinking about cashing out, via acquisition or IPO? Here’s what Vladimirskiy said about that during a NerdioCon “ask me anything” session yesterday:

“It’s a question we often get, and what we say is obviously we do have financial backers, we have venture capital and growth equity behind us, which means that people are looking for a return on investment at some point. However, we are currently in the mode of building value and growing the company and adding as much value to our partners and customers as we can. And the way we look at it is if we continue doing a good job and meeting you where you are in terms of your needs, then what that eventual return is going to look like some time in the future is going to sort itself out. So we’re really not focused on that at the moment.”

Surprise! To grow an MSP channel, it helps to understand MSPs

Sales of managed services worldwide totaled $488 billion last year and will grow at an 11% CAGR for the next three years, according to McBain.

That, as b-school instructors and financial professionals like to say, is a lot of cheddar, and it’s inspiring a bunch of traditionally enterprise-oriented vendors to start courting MSPs. You can’t blame them for assuming MSPs will welcome that wooing either. As McBain noted, CrowdStrike (to cite an example I’ve written about recently) is driving $1 billion a year in sales through the AWS Marketplace alone. Who wouldn’t want a shot at sharing in that bounty?

A conversation during NerdioCon with Matt Solomon (pictured) of Channel Program, however, suggests it’s going to take more than a name brand, lots of revenue, and a fat marketing budget to get some newcomers to MSPs the results they want.

Solomon, who is chief business development officer at Channel Program, is in an excellent position to reach that conclusion given that helping vendors of all sizes connect with MSPs and vice versa is what he and his colleagues do all day. Larger vendors new to the MSP community often have a harder time of it, Solomon says, mostly because they don’t know what they don’t know, and there’s a lot they don’t know.

“I think they see the opportunity, but I don’t think they understand even some of the basics of multi-tenancy and things that are just absolute requirements, [like] integrations with ConnectWise, Kaseya, HaloPSA,” he notes.

That doesn’t stop them from spending a whole lot of money in uninformed ways and then wondering why there’s so little ROI, however. “I won’t say the names, but these companies will come in at top-level sponsorships and they’re gone in a year,” Solomon says. “You see it all the time.”

Ending that phenomenon is part of why Channel Program recently bought sales consultancy CyberSells, which should have plenty of work to do. Big, MSP-curious vendors badly need to slow down, do their homework, build real partner relationships, learn what MSPs truly value, and then forge a thorough, disciplined strategy for delivering it—or else get used to big bills and little to show for them.

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