VMware shakes up EMM market with $1.7bn M&A

VMware will pay around $1.7 billion (US$1.5 billion) to acquire enterprise mobility management (EMM) vendor AirWatch, in a deal expected to spark further consolidation in the sector.

Under the deal, which is expected to close in late Q1, VMware will pay US$1.175 billion in cash and $365 million in instalment payments for the acquisition.

AirWatch founder and CEO John Marshall will remain in charge at the company, which will be folded into VMware’s end-user computing business group. Co-founder and current AirWatch chairman Alan Dabbiere will oversee a new AirWatch operating board reporting to VMware’s CEO.

VMware plans to make AirWatch’s Atlanta office the centre of the combined company’s mobile operations.

In a research note, Ovum senior analyst for consumer IT and integrated media Richard Absalom said the acquisition will allow VMware to plug a gap in its product portfolio.

“VMware’s strength and reputation lies in desktop virtualisation, which it has used as its primary method to manage enterprise mobile estates,” he said. “AirWatch will provide it with attractive, tried and tested, alternative features in mobile device management, mobile app management and mobile content management.”

The fast-growing EMM market has already seen heavy M&A activity over the last two years, and VMware’s acquisition of AirWatch is a significant market shake-up, he said.

“We expect the VMware-AirWatch deal to kick-start a busy period of acquisition activity, as mega-vendors that are not already heavily involved in the space buy into it.”

VMware also revealed it expects to report a 15% increase in fourth-quarter revenue to US$1.48 billion. This is at the top end of the company’s projections for the quarter.

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