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VMware Buys Mobile Enterprise Security Provider for $1.54 Billion

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Cloud software provider VMware beefed up its mobile security capabilities in the enterprise by acquiring AirWatch for about $1.54 billion, VMware announced today on its company's website. The deal "extends VMware’s proposition from data-center to device, and strongly positions us for the Mobile-Cloud era," Sanjay Poonen, executive vice president and general manager for VMware, wrote on a company blog post.

Why VMware's Hot

Last month, Forrester Research named VMware as one of the 10 most significant private cloud providers. Forrester also noted the company was using existing product portfolios and acquisitions to pull together a whole range of capabilities — and noted VMware's functionality was "rapidly expanding although … less emphasis has been placed on tying all this functionality together than it has it has with other vendors."

VMware customers, Forrester added, benefit from tighter integration between existing products and cloud-specific products.

In 2012, the Silicon Valley-based giant reported revenues of $4.61 billion with 500,000 customers and 55,000 partners. VMware's NASDAQ stock was trading at $98.5 a little after noon ET today, up 1.17 percent.

Where AirWatch Fits

AirWatch, which in 2013 acquired Motorola's mobility services unit, "has been one of the clear leaders in the enterprise mobility management market, exhibiting phenomenal growth over the last few years," said Ovum analyst Richard Abslaom.

Atlanta-based AirWatch, whose Secure Content Locker app mobile content management solution earned CMSWire's Mobile App of the Week last February, has since 2003 been an enterprise, mobile device, mobile application and mobile content management company. 

With AirWatch, VMware adds a "foundational element to our end-user computing portfolio that will enable our customers to turbo-charge their mobile workforce without compromising security," VMware CEO Pat Gelsinger said in a statement.

What also attracted VMware this direction? AirWatch's fast growth, large customer base and the fact VMware can also add an important array of features to its "end-user computing unit," Abslaom said.

"Where VMware has specialized in mobile virtualization to manage enterprise mobile estates, AirWatch will give it tried and tested alternative features in mobile device management (MDM), mobile app management (MAM) and mobile content management (MCM)," he added.

AirWatch, with 1,600 employees and 10,000 customers, helps enterprises securely manage mobile devices and an increasingly mobile workforce. The Atlanta site is expected to expand and be the center of VMware's mobile operations. 

Poonen noted, "After the closing of the acquisition, the combination of AirWatch and VMware will make us an instant leader in enterprise mobile management and security, one of the fastest growing and most strategic markets to businesses today."

4th Quarter Revenue Up for VMware

VMware also announced today preliminary financial results for the fourth quarter of 2013.

Revenues for the fourth quarter are expected to be $1.48 billion, an increase of 15 percent from the fourth quarter of 2012. License revenues for the fourth quarter are expected to be $687 million, an increase of 15 percent from the fourth quarter of 2012.

Deal Kick-Starter?

Abslaom said the market here 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," the analyst said. "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."


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