VMWare purchased AirWatch today in a move that will expand the company’s mobile reach. The deal was valued at $1.54 billion and is designed to give the virtualization company an increased presence in the mobile marketplace. Adjusting to the explosion of the mobile market is a reality that every tech company has had to face in recent years, and VMWare is no exception. AirWatch is a mobile device management company, and so while on the surface it may seem to be an odd purchase for a virtualization firm like VMWare, it does give them an access point to the mobile market.
Another attractive aspect of AirWatch for VMWare is the security component. The technology and access provided by AirWatch will allow VMWare to provide security services to mobile devices under their management. Online security is a vital issue not only to technology firms and their enterprise customers but to consumers as well. With mobile devices encompassing an ever increasing component of transactions, security in this environment is becoming more crucial than ever. The recent theft of customer information from both Target and Neiman Marcus illustrates the potential consequences of failings in this area.
The $1.54 billion sale price is something of a coup for AirWatch, as their company was valued at approximately $1 billion after having secured $225 million in investments in 2013. The deal calls for VMWare to pay $1.17 billion in cash in addition to $365 million in installments and stock options. VMWare was looking for ways to expand its business as investors were beginning to worry that the company had maximized its current potential. The purchase of AirWatch addresses this concern and buys VMWare an expanding mobile reach.
VMWare’s field of expertise is virtualization, which is a process of expanding hardware capabilities through software. It essentially allows companies to do more with less. They can run multiple operating systems, multiple pieces of software, without having to invest in the vast server and hardware architecture that was required in the past. Virtualization is often used synonymously with “cloud computing” and while there are similarities between the two concepts, the two terms should not be used interchangeably.
The purchase of AirWatch by VMWare is likely to be well received by both investors and enterprise companies purchasing their services. There are currently about 100 different vendors in the mobile device management market, making it a field that likely requires some consolidation. AirWatch is considered one of the top performers in this field, making it an attractive candidate for VMWare in this respect. This is especially important in the context of the security aspect of the purchase previously noted.
The technology marketplace is a rapidly changing field. As technology itself grows and adapts so too do the companies that provide those services. The explosion of activity in the mobile arena makes it an area that every technology company must have a plan to access. VMWare understood this reality and took the opportunity to grow their business accordingly. VMWare’s move today to buy AirWatch expands their mobile reach.
By Christopher V. Spencer