A Few More Thoughts on VMware’s $1.54 Billion Acquisition of AirWatch

Paula Musich
Paula Musich

Summary Bullets:

  • Consolidation of the enterprise mobility management market (EMM) will continue, but it doesn’t necessarily mean that’s good for EMM customers.
  • When the dust settles from continued consolidation, at least one pure-play, independent provider will be left standing to supply a best-of-breed alternative.

I can’t resist the opportunity to weigh in on the still fairly recent news of VMware’s planned acquisition of leading pure-play enterprise mobility management provider AirWatch for a reported $1.54 billion.  Of course, this move was not surprising given the continued march of consolidation activities in the EMM market.  VMware follows IBM with its Fiberlink acquisition, the much smaller and stealthier acquisition of BitzerMobile by Oracle, and VMware rival Citrix’s acquisition of Zenprise just over a year earlier.  The move is also not surprising, given the failure of VMware’s Horizon Workspace to catch any traction in the mobile application management segment, as well as the appointment of former SAP mobility chief Sanjay Poonen as GM and EVP of VMware’s End-User Computing group last August. 

However, the consolidation may or may not be a positive development for enterprise customers, depending on their unique perspective.  While it’s encouraging for more risk-averse customers to see a more assured future for the EMM platforms offered by the formerly independent pure-play vendors, there are still execution risks if the acquiring company mishandles the integration.  In this case, VMware now essentially has two different mobile application container technologies that it must rationalize.  The pace of innovation, or at least focus of development, is likely to shift.  The fast pace of innovation that has been a hallmark of AirWatch is likely to slow as VMware asserts its own separate priorities on AirWatch developers.  The focus of development will ultimately turn to integration.  That’s likely to result in a period of between nine and twelve months of no new real innovations, judging by what happened with Citrix and Zenprise, as Keith Katz, Vice President of Management Products at MEAP provider Kony, rightly points out.  It could also result in higher prices as competition eases with a dwindling field of competitors.  On the other hand, multinational AirWatch customers will likely see a faster expansion of local support outside of North America.

The success or failure of these more recent forays by large IT vendors into the EMM market will unfold over time.  Yet, the consolidation march in the EMM market will no doubt continue throughout 2014, given the large number of independent vendors that still service the highly competitive market.  Still, I’d wager that either Good Technology or MobileIron remains independent, taking the IPO exit ramp for investors rather than the acquisition route.  In any given market, there’s usually room for at least one independent vendor that can be considered ‘best of breed.’  Aruba in WLANs is a great example of that premise, as is Proofpoint in content security.  There are always buyers who prefer best of breed, and both of those vendors can arguably wear that mantle.

What do you think?

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