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Why VMware spent $1.5B on AirWatch

Mobile is big and VMware needs to get out of just virtualization and cloud markets

By , Network World
January 22, 2014 02:50 PM ET

Network World - VMware's purchase of AirWatch shows just how important the mobile device management market is for not only end users, but big technology companies too. The move - which at $1.5 billion is the largest acquisition in company history – also sets VMware on a path to further diversity from its core virtualization and cloud computing markets and almost instantly become a major player in the mobile market.

AirWatch is one of the leading providers of mobile device management (MDM), or sometimes called enterprise mobile management (EMM) software. Offered mostly as a hosted package, AirWatch lets IT departments get a handle on mobile devices from wiping them clean to monitoring what is done on them, which apps are installed, when they’re updated, which content is available and with what restrictions, among other features across the Android, iOS and Blackberry devices.

+MORE AT NETWORK WORLD: AirWatch CEO: We will be the “breakout market leader” in mobile management | PLUS Review: The best mobile device management tools +

AirWatch being bought by VMware is a turning point in the mobile management market, says Hyoun Park, a researcher at DataHive Consulting. “The future of mobility is moving toward virtualization where the hardware becomes less important and managing mobile devices through software becomes more important,” he says.

With MDM technology it doesn’t matter what devices employees of a company have, whether they are brought by employees, or company owned. If a business needs control over mobile devices similar to how it controls desktops, the technology is there to do it now. With a big-name IT vendor like VMware making such a significant splash in the market, it will bring MDM even more mainstream. “This marks the end of mobile device management as a standalone, niche category and the beginning of it as a core IT function,” Park says. “Mobility has to be a part of general IT strategy today.”

The purchase is also the latest in a string of mergers and acquisitions in the MDM market during the past 18 months, but it’s the biggest in this still young industry. Citrix bought Zenprise in late 2012 and IBM scooped up FiberLink in November. Analysts expect more M&A activity to come: MobileIron and Good Technology are two other prime acquisition targets for vendors like HP and Oracle, which may look to round out their mobile strategies, says independent analyst Jack Gold.

This marks the end of mobile device management as a standalone, niche category and the beginning of it as a core IT function.

AirWatch is in a solid position, having raised $200 million in a series A venture financing round in early 2013. It grew in the last year from 900 to 1,600 employees and boasts 10,000 paying customers, according to VMware. It didn’t have to sell, says Aragon Research’s Jim Lundy. In that sense, the move is a great one for VMware to scoop up one of the leaders of this industry. VMware will likely integrate its existing Horizon virtual desktop technology with the AirWatch platform, Gold says.

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