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VMware makes major mobile security acquisition

AirWatch chairman Alan Dabbiere and CEO John Marshall

After posting solid Q4 financials VMware Inc. went shopping and grabbed enterprise mobile security player AirWatch of Atlanta for US$1.5 billion.

The payment plan for AirWatch will see VMware hand over $1.175 billion in cash and then spread out another $365 million in installments.

One source close to the situation told CDN that AirWatch will be run autonomously from VMware, the same as the EMC/VMware relationship.

AirWatch sees an alliance with VMware as its chance to bring its solutions to market faster, while expanding is market reach.

According to a company statement from AirWatch, it does not anticipate any disruption in business or customer support. Customers can continue to work with the same team they have been working with.

Company CEO John Marshall will still be in charge. However, he will be part of VMware’s End User Computing business.  AirWatch co-founder and chairman Alan Dabbiere will be overseeing a new AirWatch operating board and will now report to Pat Gelsinger, VMware CEO.

Richard Abslaom, analyst at Ovum, called this deal a successful exit for AirWatch during a period of intense consolidation in the mobile device management marketplace.

“We expect the VMware-AirWatch deal to kick-start a surge in M&A activity in the space over the next 6-12 months as the remaining mega-vendors buy their way into this fast growing market. If these offers don’t come in, there is potential for one or two of those niche players to become a dominant “mini-major” in the space, consolidating the competition and becoming the go-to name specifically for EMM.”

Abslaom added that AirWatch is also an important piece of the VMware puzzle.

“AirWatch’s fast growth and large customer base will have proved highly attractive to VMware, which can now also add an important array of features to its End User Computing unit. Where VMware has specialized in mobile virtualization to manage enterprise mobile estates, AirWatch will give it tried and tested alternative features in mobile device management (MDM), mobile app management (MAM) and mobile content management (MCM).”

Privately-owned AirWatch is one of the market leaders in mobile management. The company has 1,600 employees and 10,000 customers worldwide. AirWatch also received approximately US$200 million in investment last year used to acquire Motorola’s mobility services unit.

Eric Chiu, president & co-founder of HyTrust, a cloud control vendor based in Mountain View, Calif., said the purchase of AirWatch signals VMware’s continued focus on security. VMware has also invested in HyTrust.

“Much like how HyTrust enables greater cloud adoption, AirWatch enables broader mobile computing — this is especially important given that security is top-of-mind for every CIO following the Target, Adobe and Snowden breaches,” Chiu said.

Gelsinger said in a prepared statement that the AirWatch acquisition will enable VMware to add a foundational element to its end-user computing portfolio. This will enable customers to turbo-charge mobile workforce without compromising security.