VMware will acquire AirWatch, a mobile device management company, in a $1.17 billion cash deal that will give the virtualization software provider a play in mobility. VMware will also pay $365 million in installment payments and unvested stock options.
Mobile device management has been a hot sector desperately in need of consolidation given there are more than 100 vendors. Large enterprises increasingly want mobile device management put together with content management and collaboration.
VMware's spin is that AirWatch will give it a foothold in mobility as well as its end-user computing strategy, which revolves around desktop virtualization and delivering enterprise apps to tablets and smartphones.
According to VMware, AirWatch will continue to be led by CEO John Marshall. AirWatch will be lumped into VMware's end-user computing group, which is led by Sanjay Poonen, general manager. AirWatch's co-founder Alan Dabbiere will be on the unit's operating board and report to VMware CEO Pat Gelsinger.
Given those executive moves, VMware seems interested in continuity as well as keeping AirWatch's customers in the fold. On a conference call, Gelsinger said AirWatch will bring talent and mobility knowhow to VMware. Gelsinger added that VMware plans to beef up AirWatch at a global scale.
AirWatch, based in Atlanta, was one of the more established mobile device management (MDM) companies with more than 10,000 customers and 1,600 employees. MDM has become a key piece of the enterprise given the bring-your-own-device trend and the headaches of managing corporate- and employee-owned smartphones, tablets and ultimately wearables.
The problem for companies like AirWatch is that the big enterprise players such as Citrix, VMware, BlackBerry and IBM were all eyeing the space and surrounding MDM with other tools. AirWatch had one of the broader mobility stacks, but needed more scale to compete with giants.
With VMware, AirWatch has distribution and a broader stack to surround its tools. VMware said that the AirWatch deal will close in the first quarter and form an mobile product group. Poonen said AirWatch will enable VMware to grow its share in mobile work and collaboration. "Mobile is the new desktop," said Poonen. "The world needs a robust mobile platform in the post-PC era. AirWatch will become the focal point for VMware's mobile strategy."
Meanwhile, VMware outlined its fourth quarter results and provided its 2014 outlook. The company said it expects fourth quarter to be $1.48 billion, up 15 percent from a year ago. Wall Street was expecting $1.47 billion. License revenue is expected to also be up 15 percent in the fourth quarter compared to a year ago. Those projections exclude revenue attributed to Pivotal Software, another company owned by storage giant EMC.
VMware also said that AirWatch is expected to contribute $75 million in revenue in 2014.
The consolidation round
So what's next? VMware has a habit of kicking off consolidation trends. For instance, VMware bought Nicira, a software defined networking company, and other tech players quickly followed. Last year, it was almost as if a software defined networking company was acquired every week.
VMware's purchase of AirWatch is likely to have a similar impact. Why? There are simply too many MDM vendors. At a recent roundtable hosted by ZDNet, CIOs said that they were basically waiting for MDM 2.0 and vendors to mature before jumping on the bandwagon. These tech leaders also wanted more than MDM-only application.
Indeed, Marshall, who spoke to ZDNet at the Gartner Symposium and ITXpo last year, said Airwatch's take on MDM revolves around content and collaboration. Marshall's said MDM is a commodity and content is what matters. In that respect, Airwatch is starting to look more like Box.
Here's Gartner's Magic Quadrant on the sector.
Poonen said that AirWatch has little overlap with VMware's existing software. He also said VMware thought that AirWatch was well ahead of its competitors. "No other player in this category matches our breadth of solutions," said Poonen.
Bottom line: VMware bought an MDM leader with AirWatch and acquired a mobile strategy to go along with it.
Today I received an Alert Flash regarding issues on IBM Notes/Domino Feature Pack 10 with the hint to stop upgrades. Currently the following issues are known: (fix available) The IBM Sametime client embedded within the IBM Notes client stops working after you install Notes 9.0.1 FP10 on top of Lotus Notes 9.0.1 FP9 + Sametime Embedded build 9.0.x clients http://www-01.ibm.com/support/docview.wss?uid=swg22012939(verified by L2) SMTP Mails with Umlauts broken after installing FP10 This seems to be regression. Support is working.(verified) Group iQ.Suite - Out of License because the internal product numbering has changed. The API reports a different version number. Before upgrade eg 18.104.22.168.0.0 => 9.0.1 FP9, after upgrade 900.0.11.0.0.0 => 9.0.1 FP10 Group is informed and can assist. Group will provide Hotfixes of iQ.Suite (19.1.5, 20.2.3 or 20.3) soon.(not yet verified) org.eclipse.core.runtime.CoreException: Plug-in http://com.ibm.domino.java .api was unable to …
The JVM in Designer is Upgraded to use 1.8 at compile time Eclipse Platform Upgraded to 4.6.2Embedded Sametime Upgraded To 901 By Default Add-on Installer for Notes CCM (Connections Content Manager)
The full listing of the new features are listed here: