AirWatch: A billion dollar journey from Wi-Fi to EMM
Exclusive “I’ve had a few sleepless nights in the last week,” admits Ian Evans, EMEA managing director of AirWatch.
You can’t blame him. Yesterday VMware announced its intent to buy the enterprise mobility management (EMM) provider for $1.54bn (£929.7m), in what is already a contender for biggest enterprise story of 2014.
It’s been a long and winding road for the company which started life as Wandering WiFi. And like many big acquisitions of this nature, it takes time, lots of heated discussion behind closed doors, as well as a certain amount of personal involvement, from the top floor to the shop floor.
For Evans, whose remit includes a lot of contact with CEO John Marshall and chairman Alan Dabbiere, this involved an entire day walking in the brisk air to be alone with his thoughts.
“We had three options on the table, like every company does: be acquired, go to further VC funding, or IPO the organisation,” he explains.
“The problem is the IPO route is probably the one we all thought was the right route.”
This was an interesting admission. Is there a tinge of regret at what’s transpired?
As Evans admitted himself, the IPO market is extremely hot right now – and in his words, “there was massive interest in us becoming a public company.” But he also noted the timing was “probably a little bit sooner than we wanted” – and if you’re going to be picked up by anyone, VMware is a good bet.
“They’re good at acquiring companies, they’re good at enhancing them and running them, they leave them alone if they believe in them – and they don’t spend that kind of money if they don’t believe in them – so I think that was the best option,” Evans adds.
It’s these sorts of decisions that drive business leaders to long walks in the cold air. But Evans is more than satisfied with the outcome.
“[VMware] is an amazingly well maintained and run ship,” he explains. “Culturally, they also have values that startup companies don’t have – [they] look after their employees in a different way, [they’re] very family oriented as an organisation, but [they’re] also a friendly company.
“I’ve been through acquisitions in the past where eight people will turn up to your office and ask you to leave it. There’s no ego trip from the VMware team, this is very firmly ‘we’re acquiring a technology, the leader in the field...and we just want to help you grow faster.’
“Nobody pays $1.5bn if they don’t believe in it,” he adds.
It helps too that the terms of the deal are, on first glance, very kind to AirWatch. There’s no big branding change – apart from adding ‘by VMware’ to the end of the company moniker – and the company’s 1600 employees aren’t branching off to different areas.
As Enterprise AppsTech reported, the workforce will still be under Marshall’s remit, with a new operations team led by Dabbiere reporting directly to VMware CEO Pat Gelsinger.
Evans, who was tasked with building up AirWatch’s EMEA arm three years ago, was particularly effusive about his CEO and chairman.
No news there, some might say, but his words were sincere.
“They’ve always stayed probably the most honourable two men I’ve ever known in business,” he explains. “We’ve built a 270 people organisation here that drives results, and they’ve never interfered.
“They went out of their way to sit down with me and say ‘this is what we’re going to be doing, and this is why we’re doing it – and we want your feedback.’
“Most people in those positions wouldn’t do that,” he adds.
This trust is key, particularly in a world which moves as fast as the mobile enterprise. The key trend of the past year has been the movement from pure mobile device management (MDM) to apps, content and collaboration, to form an overall EMM solution.
“MDM was crowded, and it was hard to differentiate other than our platform support,” Evans explains. “So we started looking at the day to day life of these executives. What are we really doing with these devices? Because it isn’t about email.”
He adds: “I couldn’t be more humbled by our leadership team in actually being ahead of that curve.”
Evans’ patch, EMEA, is fragmented. Italy and Spain is mainly around advanced MDM, whilst Russia is EMM with “every single component we could ever push”.
This is the nature of the beast – the quote that one year in mobile equals seven years everywhere else comes to mind – but there’s a more prevalent trend blossoming, which hit its zenith with yesterday’s announcement.
For VMware and AirWatch, see IBM and Maas360/Fiberlink, and Citrix and Zenprise. All traditional big tech firms, all buying companies in a similar space to boost their mobile play.
Not surprisingly Citrix, who announced the Zenprise deal in December 2012, took a somewhat different view to the general praise surrounding the VMware/AirWatch marriage.
Posting in the company blog, Citrix senior director Chandra Sekar described VMware’s vision for end computing as “laughable on many counts”, adding he was pleased that VMware had joined the party “but the dress code has changed.”*
Equally unsurprisingly, Evans hit back at this notion.
“What they’ve tried to do is tried to go down the fully integrated, embedded into the Citrix organisation approach,” he notes.
“VMware’s taking a very different approach; they’re saying ‘we are buying an organisation that is best in class and a leader in the space, we don’t want to disturb that.’”
Horses for courses, and both companies would instantly say their roadmap was better. But this leads into another issue: as VMware has bought AirWatch, is that sending a message to the competition that ‘if you were the industry leader, this would have been you’?
The rumour mill was in overdrive in the past couple of months. VMware was going to buy somebody in the enterprise mobility management sphere. But nobody in the rumour mill picked AirWatch.
There are reasons for this. Brian Katz, writing on his blog, noted that CEO Marshall was on record saying he was in no mood to sell. The App Detective, writing for brianmadden.com, said on January 7 it was between AirWatch and MobileIron, but concluded that MobileIron would be the better fit because it was a classically VC-backed firm which was based in Mountain View.
The latter was spectacularly quashed by VMware chief Gelsinger, who specifically told analysts in yesterday’s earning call that he was “look[ing] forward to tapping into the talent in the Atlanta area.”
This is why the news came as a surprise to everyone. Well, almost everyone.
Evans explained he had “a very good idea” about the proposals back in November, but was only fully brought in on the proceedings in the last few weeks, when the deal was in principle closed.
“You can tell by the way people ask certain questions,” he muses, adding: “I’ve been around long enough and run enough companies through these processes to know that you only focus on what you focus on today – and I guess for the last three weeks it’s been pretty tough.”
Two factors were influential here, Evans notes: the fact that all of AirWatch’s data centres are run with VMware’s tech in them, and the hiring of Sanjay Poonen, moving to VMware’s end user computing department from SAP’s mobility division.
“We saw six months ago, they’ve just hired this guy in, they were very serious about what they’re doing,” he adds.
This did not go unnoticed by the industry, although it’s worth adding that only in the past few months serious overtures were made. As Evans says: “We get approached every other day, in all honesty, and most people quite frankly just didn’t want to pay anything like those fees to buy the company.”
So after three months of cloak and dagger, get used to AirWatch by VMware.
The comparisons will remain – not least with Citrix, especially interesting given VMware and Citrix were big rivals in desktop virtualisation back in the day – but it has to be seen as a huge bet in the end user computing space by the California tech giant.
“VMware saw what we did in the marketplace, they love the way we execute, they want to enhance that execution by adding more investment to us and taking us to the next level,” Evans gushes. “They have a history of buying organisations and leaving them run as they are.
“It’s good news for the company, for all of our customers, our partners and our employees, but I’m super excited now to have a plan in place for the next part of our growth,” he adds.
For the future, expect plenty of conjecture and speculation on which legacy IT firms will be paired off with the remaining pure play EMM vendors.
But as far as AirWatch is concerned, this is a gamble they hope will pay off – especially with the love they would have had on the IPO circuit.
AirWatch is exhibiting and sponsoring at Apps World North America, on February 5-6 at Moscone Center West, San Francisco. Find out more about attending the event here or connect with them through the official Apps World app.
* Updated 24 January: The Citrix blog post which appeared to criticise VMware for its mobile policy has since been pulled. The link in the original piece is therefore a dead link, but if you don't believe us, here's a Google cache of the original post.
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