VMware Buying AirWatch In $1.54 Billion Mobile Security Blockbuster

VMware is acquiring AirWatch in a $1.54 billion blockbuster deal, upping its mobile security offensive against IBM, Citrix Systems and Oracle. VMware said it will pay $1.175 billion in cash and about $365 million in installment payments for AirWatch.

Atlanta-based AirWatch provides mobile device and application management along with mobile content management solutions for the enterprise. For VMware, the acquisition gives it a springboard into the end-user computing business.

Jed Ayres, chief marketing officer of MCPc, a Cleveland-based national solution provider that partners with both VMware and AirWatch, said the deal is a game- changer. The acquisition provides VMware with the leading secure mobile device management company and adds considerable more firepower to VMware's end-user compute offensive, he said.

"VMware just bought the best mobile device management company," said Ayres. "AirWatch is the leader. VMware's end-user compute story just got 10 times better."

[Related: IBM-Fiberlink Deal Could Extend Mobile Security Beyond MDM ]

AirWatch has been named the industry leader in research firm Gartner's Magic Quadrant for mobile device management for three consecutive years.

The AirWatch deal marks the second game-changing acquisition since former SAP mobile chief Sanjay Poonen was hired to run VMware's end-user compute business in August. VMware, under Poonen's leadership, in October acquired Desktone, the leading multitenant desktop virtualization platform.

"Sanjay is a great leader," said Ayres. "He has bought the leading desktop as a service and now the leading mobile device management company."This changes the game for VMware. It's all coming together for VMware. Now they have the data center tools, IT management tools and end- user compute offerings with a full end-to-end story for customers and partners."

AirWatch, whose competitors include Citrix, MobileIron and IBM/Fiberlink, has 10,000 customers globally and more than 1,600 employees in nine offices. Last year, AirWatch acquired Motorola Solutions' Mobility Services Platform business to strengthen its play around mobile devices and BYOD.

"This acquisition is a direct shot across the bow aimed at SAP, IBM, Citrix, Oracle and others that VMware sees as a threat to their mobile cloud and virtualization ambitions," wrote Jack Gold, principal analyst at J. Gold Associates, in a research note. "AirWatch has a leading position in the stand-alone MDM market, which VMware hopes to leverage to enhance its own mobile ambitions. AirWatch brings multiple technologies (some directly competing with VMware) and many partnerships that VMware will be able to leverage."

Enterprises are adopting mobile device management and it is finally beginning to get a look from small and midsize businesses, said Jon Sargent, president and CEO of Northrop, Va.-based managed service provider Padlon.

"Lost devices is a major issue, particularly when corporate information is stored on the device," Sargent said. "How to gain control and visibility over employee tablets and smartphones is going to be a big area in the next couple of years, and that is what VMware is likely anticipating."

In a statement, VMware CEO Pat Gelsinger said, "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."

STEVEN BURKE contributed to this story.

PUBLISHED JAN. 22, 2014