VMware doubles down on enterprise mobility with $1.5B buy of AirWatch

One way to prove you’re really into the mobile enterprise, is to spend over a billion on a mobile device management company. That’s what VMware(s vmw) is doing with its $1.54 billion acquisition of AirWatch, announced early Thursday. The deal includes $1.175 in cash plus $365 million in “installment payments and assumed unvested equity,” according to the press release. 

VMware will acquire AirWatch for approximately $1.175B in cash and approximately $365M of installment payments and assumed unvested equity. – See more at: http://www.vmware.com/company/news/releases/vmw-newsfeed/VMware-to-Acquire-AirWatch/1801180#sthash.cJs5s355.dpuf

In a blog post announcing the deal, VMware’s End User Computing chief Sanjay Poonen wrote:

The acquisition of AirWatch extends VMware’s proposition from data-center to device, and strongly positions us for the Mobile-Cloud era.  After the closing of the acquisition, the combination of AirWatch and VMware will make us an instant leader in enterprise mobile management and security, one of the fastest growing and most strategic markets to businesses today.

VMware has been trying hard to make a run at Citrix in desktop virtualization and mobility and probably needed to buy a Mobile Device Management (MDM) company like AirWatch or a rival like MobileIron or Good Technology to make that work. At the same time, as more enterprise applications flow to SaaS providers like Salesforce.com(s crm) and others, those SaaS vendors are making their own mobility push, which could be a countervailing force here. If you download your apps from Salesforce.com or other SaaS vendor, it’s unclear, at least to me, how much you need a third-party MDM solution.

This deal also has some VMwatchers scratching their heads. The company’s traditional strength is selling server virtualization and associated management tools into the data center; its end-user focused efforts like VMware Horizon BYOD have been lackluster thus far. That’s something Poonen has vowed to attack.

More to come. Check out AirWatch Chairman Alan Dabbiere’s take on enterprise mobility from our Mobility conference last fall.

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Note: This story was updated at 7:11 a.m. PST  to include details on the cash and equity portions of the purchase price