After a year of big enterprise mobility management acquisitions, 2014 has started with the biggest move of all.
VMware Inc. surprised the mobile IT world this week with its agreement to purchase AirWatch, LLC of Atlanta, one of the largest remaining independent enterprise mobility management (EMM) vendors with over 10,000 customers.
Brian KatzHead of Mobile Innovation at a major pharmaceutical manufacturer
VMware will purchase AirWatch for $1.54 billion, making it the largest acquisition in its history. The purchase will include $1.175 billion in cash and $365 million in installment payments.
Industry watchers expected VMware to make this type of acquisition to shore up its mobility portfolio.
The move is a good sign for the continued growth of the EMM market after recent acquisitions such as IBM's purchase of Fiberlink Communications and Oracle's buy of Bitzer Mobile, according to Chris Hazelton, research director for mobile and wireless for 451 Research in New York.
"This does signal very loud and clear to the rest of the market that EMM is an important component for enterprise IT," Hazelton said.
VMware's executive vice president and general manager for end-user computing (EUC) Sanjay Poonen said he'd had his eye on AirWatch for several years, dating back to his tenure at SAP AG. Many VMware View users rely on AirWatch for EMM, he said.
"We began to see AirWatch get a lot of share from their competitors and in the meantime our conversations were building," Poonen said. "It just made sense to put this together."
Why did VMware need AirWatch?
VMware lacked some of the mobile capabilities AirWatch has and is playing catch-up in the mobile market, according to Jack Gold, mobile analyst and founder of J. Gold Associates in Northborough, Mass.
"[VMware] was looking over their shoulders at Citrix and IBM," Gold said. "This at least puts them -- from a technology perspective -- on par with those guys, but what they do with it is another story."
"[AirWatch] brings a level of expertise it would have taken VMware a lot of time to create," Gold added.
VMware hadn't focused on mobile device management (MDM) and needed more tools to compete, Hazelton said.
"With AirWatch, they get tools that aren't only easy to deploy in the market, they're already in the market," he said.
VMware introduced Horizon Suite and Horizon Mobile in early 2013. It changed its strategy for Horizon Mobile after Apple released its iOS7 mobile application management (MAM) tools.
Horizon Mobile wasn't well-received, in part because VMware didn't realize the difficulty of working with original equipment manufacturers and carriers to get it out, according to Brian Katz, head of mobile innovation at a major pharmaceutical manufacturer in New Jersey.
And while MDM features are important, they aren't enough. AirWatch's package of mobile content management, MAM and MDM made an attractive option for VMware, Katz said.
"MDM is dead as a product," Katz said. "Out of the ashes of MDM, EMM is rising."
AirWatch to retain branding in VMware EUC
Because the deal is still subject to regulatory approval and is expected to be completed later in the first quarter, Poonen couldn't provide specifics on plans for how AirWatch's capabilities will mesh with VMware's EUC portfolio.
He did say there's very little to no overlap between AirWatch and the "baby steps" VMware had produced in the mobile market to this point. AirWatch is expected to retain its brand and autonomy so it can continue to grow the way it had been, Poonen said. He added the company will not relocate from Atlanta.
Existing AirWatch users can expect business as usual for their support, Marshall said. They can expect continued and more aggressive investment in the technology, as well as more global support in light of VMware's size, he added.
This major deal had everyone in the mobility community talking. Check out some of the best analysis of VMware’s AirWatch acquisition.
The expectation is that VMware will integrate AirWatch into its EUC product lineup, but others say AirWatch should take the pieces of VMware's EUC portfolio and incorporate them into its product because Airwatch has more customers and momentum in the EMM market.
"You don't want to slow them down," Katz said. "You want to help them move faster."
AirWatch's 1,600 employees will still report to co-founder and CEO John Marshall as part of VMware's EUC group. AirWatch Chairman Alan Dabbiere is slated to oversee a new AirWatch operating board that's expected to report to VMware CEO Pat Gelsinger.
Last week, Dabbiere and Marshall were noncommittal about the future of AirWatch as an independent company. Dabbiere said they were open to joining a larger company if the opportunity arose.
EMM market continues to consolidate
At this point, the EMM market is mature and the amount of consolidation has been predictable, Gold said. He recalled similar trends with laptops and email providers.
"It's not uncommon when markets mature," Gold said. "New markets come with lots of activity and they consolidate over time. It's the way of the world."
MobileIron of Mountain View, Calif., is the largest independent EMM vendor left and the AirWatch move puts the company in an interesting position.
"MobileIron's interest in going IPO may drive a price that approaches AirWatch's price," Hazelton said.
Prior to the news of the AirWatch acquisition, MobileIron said it is interested in remaining an independent company.
Executive editor Colin Steele contributed to this report.