In a move that many didn't see coming, VMware announced its intention to purchase enterprise mobile management (EMM) vendor AirWatch last night for $1.54 billion.
In one swift maneuver, VMware has taken a major EMM player off the market and likely set the stage for further consolidation among the remaining players.
Brian Katz, a director at pharmaceutical company Sanofi, where he manages mobile initiatives (and also a contributor to this publication) summed up the reason for the deal in this tweet:
Katz added in an email, "VMware gets a mobile strategy that is already successful. They are buying arguably the biggest [pure] EMM vendor out there who is already making revenue with a proven product and gets them into the endpoint game on mobile which they have been struggling to get to," he wrote.
R "Ray" Wang, who is the founder at Constellation Research, told CITEworld, "VMware has needed a mobile play for awhile. This is key to completing their end user management story."
As for AirWatch, Wang says that "EMM is a feature today. You need more than just that as the space grows."
Katz says AirWatch also gained in the deal. "[It] gets deep pockets, worldwide staff to greatly augment what they are already doing, freedom from going it alone and some really good tech people [as well as] some missing pieces from its own strategy."
Meanwhile Palador co-founder Benjamin Robbins, whose firm helps clients build their mobile strategies, says it is both the end and beginning of an era. "It's the end of an era because AirWatch equals MDM. MDM can no longer be a point solution and must be part of a larger EMM framework," he explained. "At the same time, it's the beginning of an era because security firms must have a reputable MDM component as part of the their EMM strategy," he said.
Jack Gold, principal at mobile research firm Jack Gold and Associates, added that VMware was struggling mightily in the mobile space and purchasing AirWatch gives them a fighting chance. He said that VMware specifically brought Sanjay Poonen on board from SAP to give the unit a lift and AirWatch fills in some blanks and brings a growing customer base with them.
"I think Sanjay realized the only way for them to have an impact in a consolidating market was to buy someone with market share, rather than try to invent their own place in the market. Sanjay has done this before at SAP, so he went back to his comfort zone. AirWatch brings VMware market share and technologies it does not have. These will be used to complement their push into cloud and virtualization in mobile," he explained in an email.
But the deal also has a cascading impact on the entire market says Chris Hazelton, research director for mobile and wireless at 451 Research. "This deal now puts intense focus on MobileIron and Good Technology, both of which have been working steadily on an IPO exit. They are the last remaining large pure play EMMs - so it is very likely that a large enterprise vendor like Oracle (which may need bigger investment than Bitzer), HP or CA may realize that the time is now to invest on a large scale on EMM," Hazelton explained.
Katz also thinks this is harbinger of consolidation in the market. "This deal does two things to the EMM market: It further consolidates it into the hands of legacy big vendors which will lead to more acquisition in the future, and secondly raises the price for those future acquisitions," he said.
In the end, these deals are often as much about markets as they are about products, but in this case, VMware gets both. They get AirWatch's solid mobile product line, which fills in a bunch of missing pieces for them and they also get a large and growing customer base, which they can tap into.
These deals always hinge on factors such as how well the two company cultures mesh and how smoothly they can integrate the two product sets into a more cohesive line of products and services. Poonen has experience doing just that at SAP and this deal looks as if it's a clear win for both sides, one that could make VMware a major enterprise mobile market player with one stroke of the pen.