VMware Steps Up MDM Battle with $1.54 Billion AirWatch Deal

VMware today said it has agreed to acquire mobile device management vendor AirWatch for $1.54 billion. AirWatch is regarded as a leading supplier of software for securing and managing smartphones, tablets and other systems and personal cloud storage services.

IT managers are increasingly letting employees use their personal devices on their networks. Even on those networks that may not allow them, many people use their own devices anyway and IT managers need to ensure they can control how and where data is accessed and stored. While VMware has been rolling out its own mobile device management tools called Horizon, it appears VMware has now opted to go with the more established AirWatch, a privately held company based in Atlanta, Ga. with 10,000 customers and 1,600 employees.  To what role Horizon will play in VMware's future remains to be seen but based on the company's initial statements, it looks like Horizon could be left out in the cold.

"AirWatch has a leading position in the standalone MDM market, which VMware hopes to leverage to enhance its own mobile ambitions," said analyst Jack Gold  in a statement released via e-mail. "However, it will be a challenge for VMWare to integrate the AirWatch technology with its own, as is the case with any technology acquisition into an existing base. We expect that AirWatch will become the dominant technology base for any future [VMware] Horizon product, and indeed expect that Horizon will ultimately fade away in favor of the AirWatch brand."

Virtually every major IT vendor is now emphasizing mobile device management. Microsoft has made mobile device management a key feature in System Center 2012 R2. By acquiring AirWatch, VMware also joins a number of established IT vendors that have added device management software to their overall systems administration portfolios. Citrix acquired Zenprise just over a year ago, Oracle in November bought Bitzer and just last week IBM said it is acquiring FiberLink. And Sybase's MDM business was a key reason SAP acquired that company nearly four years ago (in addition to its database business).

At the same time, traditional remote monitoring and management suppliers such as Continuum, GFI Software, Kaseya, LabTech, Level Platforms and N-able are extending their mobile device management features. Many of them have historically sold their wares primarily to managed service providers. However, many have recently begun targeting enterprises.

VMware said the AirWatch operation will be the focal point of its mobile systems management operations. AirWatch will become part of VMware's End User Computing Group, headed by Sanjay Poonen, the company's general manager and executive vice president.

AirWatch founder Alan Dabbiere will report directly to VMware CEO Pat Gelsinger. "With this acquisition VMware will add a foundational element to our end-user computing portfolio that will enable our customers to turbo charge their mobile workforce without compromising security." Gelsingter said in a statement.

Under terms of the deal, VMware is funding it with $1.75 billion in cash and $365 million in installment payments, the company said. It's slated to close this quarter.

VMware also issued preliminary financial results for the fourth quarter of 2013, which it will officially release next week. The company said revenues are expected to be $1.48 billion, a 15-percent year-over-year increase. The uptick takes into account divestitures including Pivotal Software. Excluding those divestitures, VMware said revenues increased 20 percent.

Posted by Jeffrey Schwartz on 01/22/2014 at 11:23 AM