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VMware Late to the Mobile Dance but No Longer Without a Date

January 31, 2014 and

VMware is a company with a rich history. Founded in 1998, it has done as much as any firm in promoting and furthering server virtualization and a radical rethinking of enterprise data centers. The company was a pioneer in virtualization and policy-driven automation and now works to virtualize infrastructure from the data center to the cloud to mobile devices.

VMware’s entire footprint now covers data center infrastructure, hybrid cloud, and end-user computing. This is a large and growing addressable market, and not surprisingly, VMware has deemed it necessary to make numerous acquisitions over the years to keep pace with the competition (in particular, a pesky desktop virtualization company called Citrix). Given that history, it might come as a surprise that VMware’s acquisition of mobile device management (MDM) vendor AirWatch last week was the largest acquisition in the company’s history.

MDM is an odd market because although it is relatively mature, it is also one in which acquisitions are made based on expectations of future growth as opposed to current revenue. AirWatch’s bookings in the 2014 calendar year are estimated at approximately USD $100 million. That’s not a lot for a company that is widely considered the largest in the MDM market and for one that just sold for USD $1.54 billion.

So, what did VMware get for its money?

    • AirWatch claims 10,000 customers
    • AirWatch is expected to add approximately USD $75 million to VMware revenue this year
    • AirWatch takes research and development seriously and has a large R&D team
    • AirWatch has expanded well beyond MDM with a broader mobile application management and mobile security portfolio
    • The broader portfolio is not yet particularly mature, however, and market traction for these newer products is not clear

More importantly, this acquisition has given VMware credibility in the enterprise with respect to its strategy for securely delivering content to mobile devices. This is a huge requirement for VMware’s broader business as mobility and cloud services, both enabled by virtualized infrastructure, increasingly are intertwined. VMware has tried for several years to internally develop products for mobile devices, but with limited success. This deal gets them back in the game.

For a deeper look at VMware’s acquisition of AirWatch, see the analyst brief VMware Acquires AirWatch.