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VMware Makes $1.48B, Then Spends $1.17B for MDM Company AirWatch

VMware's preliminary report shows 15 percent revenue upswing. It also says the AirWatch buy is largest in company history.

• By Michael Domingo
• 01/22/2014

The mergers and acquisitions pace is picking up early this year with a number of companies in the virtualizaton and cloud computing space making some key investments. VMware is the latest and the mega-deal it has struck with AirWatch will help to shore up VMware's end-user computing strategy.

VMware announced this morning that it has struck a deal to acquire the mobile security company for $1.17 billion in cash, along with other incentives. According to VMware, AirWatch is the largest acquisition measured in dollars that the company has made to date.

Both companies made the announcement during an early morning call to announce preliminary fourth quarter earnings. VMware said it expects to tally a reported $1.48 billion in revenue when it finalizes its report on January 28. That revenue bests the 2012 Q4 result by 15 percent.

Until today's acquisition, AirWatch was the largest independently run mobile device management companies, managing more than 10,000 customers. Founded in 2003, the company develops a slew of cloud and on-premises services for managing and securing a range of mobile devices, from smart phones to laptops, available via subscription or through perpetual licenses. It can manage devices for smaller companies, and also has an enterprise-grade solution with its all-encompassing AirWatch Enterprise Mobility Management platform.

VMware said that the AirWatch buy will mainly fill the mobile security gap in its end user computing strategy. "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," said VMware CEO Pat Gelsinger through a press release. Gelsinger said that future development from AirWatch will impact VMware globally.

From outside observations, the acquisition is the right one. Elias Khnaser, a Virtualization Review blogger recently took VMware to task for not having acquired a mobile device management company. Just a week ago, he specifically called out AirWatch among "some good picks," along with MobileIron or OpenPeak.

The group will continue to be headed by AirWatch CEO John Marshall and will be absorbed into VMware's End User Computing group, headed by executive vice president and general manager Sanjay Poonen. AirWatch co-founder and chairman Alan Dabbiere will join VMware as part of a newly formed AirWatch operating board; he'll report to Gelsinger. AirWatch itself is a behemoth. Based in Atlanta, Georgia, it has around 1,600 employees. Around this time last year, VMware announced that it was just starting to cut its global workforce.