In the latest salvo in the battle to reshape the architecture by which business works VMWare, a multi-billion dollar server virtualization company, just spent $1.5 billion to buy AirWatch, which sells technology to secure data and applications on mobile devices like tablets, smart phones, and laptops.
The acquisition, and the hundreds of millions of dollars venture investors and corporations have spent on new storage technologies, databases, and security, are all trying to find ways to bring more business applications and services to mobile devices like smart phones and tablets.
With the acquisition of AirWatch – which had previously raised $225 million from investors including Insight Venture Partners and Accel Partners – VMWare can now sell security services that make it easier for professionals to do more work outside of the office.
“AirWatch provides real, important value now. They’re right there when an enterprise says we need to get this stuff [i.e. data and applications] under our control,” said Richard Wells, a managing director with the technology focused growth capital and private equity firm Insight Venture Partners, which led a $225 million financing for AirWatch back in 2013.
That Series A round was one of the single biggest first round financings for a technology company in years, and netted AirWatch a valuation of roughly $1 billion, according to several sources familiar with the deal.
That’s pretty big money, and the AirWatch deal is all part of a wholesale re-evaluation that companies are doing of the basic technology infrastructure that employees use to conduct business every day.
Venture investors and companies like VMWare have spent steadily increasing amounts on mobile security hardware, software and services so that people can do more work from more places – and do it securely, according to data from CrunchBase.
Other big enterprise companies are buying into mobile security too. Citrix, which bought the venture-backed Zenprise in late 2012, and IBM, which paid an undisclosed amount for Fiberlink Communications, a mobile device management are two examples. Venture capitalists have also backed independent private companies like MobileIron with $124 million in financing to pursue the same market in securing mobile business.
For its part, AirWatch sees the VMWare acquisition allowing it to take on a new set of competitors, like venture-backed companies Box and Dropbox, which have raised a combined $350 million from investors in the past two months.
“We see the enterprise content space as an extension of our platform,” said AirWatch chief executive officer John Marshall. “[We have] all the things that make make enterprise content collaboration possible… We have access to partners that own the infrastructure and the virtualization that hits the data center.”
Venture investors view all of this activity as the first wave in moving businesses into the cloud. “Just like our consumer world shifted from 100% PC and 0% mobile to 80% mobile and 20% PC, we’re at the front end of seeing that with the enterprise,” said Matt Murphy, a partner with Kleiner Perkins Caufield & Byers.
Photo via Flickr user funkypancake.