VMware today said it will acquire AirWatch, a vendor of enterprise mobile management and security solutions for $1.54 billion, a deal that should propel the virtualization and cloud giant into the fast-growing corporate mobility market.
The terms call for VMware to spend about $1.175 billion in cash and approximately $365 million in installment payments and assumed vested equity, according to the press release. AirWatch's 1,600-member team, spread across nine offices, will continue reporting to the company's co-founder and CEO John Marshall, and the firm will fall under VMware's End-User Computing Group, headed by Sanjay Poonen, executive vice president and general manager. Alan Dabbiere, AirWatch's co-founder and chairman, will be overseeing a new AirWatch operating board that will report to VMware CEO Pat Gelsinger.
"The acquisition of AirWatch extends VMware’s proposition from data-center to device, and strongly positions us for the Mobile-Cloud era," wrote Poonen in a blog post.
By adding a mobile device management developer, VMware can vie more effectively against competitors such as Citrix in its efforts to address the entire enterprise, from datacenter to end user. No doubt VMware hopes to build on the relationships it's forged with IT professionals and CIOs over the sales and support of its virtualization solutions to act as a springboard for its mobility offerings.
VMware already has a BYOD presence with Horizon View, designed for desktop management; flexible access; end-user productivity; and cloud compatibility. Expanding into mobile is mandatory, given corporate reliance on smartphones and tablets.
This year, MDM is expected to generate more than $1.6 billion in license revenue, up from $784 in 2012, according to Gartner. When the research firm named AirWatch one of its leaders in this space, it cited weaknesses such as slow growth in the executive ranks; lack of visibility; some poor feedback about implementation and post-sales support; and unequal support across different mobile operating systems. With VMware's much bigger wallet and size, it's probable the acquisition will address all these concerns.
This acquisition most likely won't be the last one within the MDM space. Large developers such as Microsoft, IBM company Fiberlink, and Citrix are vying against smaller, independent vendors. With too many MDM choices available, CIOs are waiting for the next round -- MDM 2.0, so to speak, according to a ZDnet article. Analysts agree that the market is shifting.
“As Ovum has been talking about for the last two years, this market is fast consolidating and only a few independent leaders now remain: Good Technology, MobileIron, SOTI, plus the likes of Apperian in the MAM space. These vendors are now going to face stiff competition from megavendors such as IBM, SAP, Dell and CA, as well as VMware, Citrix, and security vendors such as Symantec and McAfee. And with several other big names yet to make major moves (HP, Microsoft for example and maybe even Oracle, which has made a relatively small acquisition in Bitzer Mobile), those remaining independent leaders look like ripe targets," said Richard Abslaom, analyst at Ovum, in a statement.
Employees at AirWatch's nine offices celebrated with bagels and balloons, according to comments posted on Reddit. Solution providers and customers appeared upbeat and optimistic about the synergies of the two companies' products and visions.
Do you agree?
— Alison Diana , ThinkerNet Editor, InternetEvolution