Musing: VMware Pays More for AirWatch for VDI than Nicira for SDN

As a network professional, it can be difficult to maintain a sense of perspective in relation to other areas of IT. Certainly, networking is the foundation on which all other services depend but it isn’t all that important to customers overall.

Networking Hierarchy of Need

VMware announced that it was buying AirWatch to boost it’s VDI capability in mobile device management space.

VMware will acquire AirWatch for approximately $1.175B in cash and approximately $365M of installment payments and assumed unvested equity.

VMware to Acquire AirWatch (NYSE:VMW)

To give you some perspective, VMware bought Nicira in July 2012

VMware will acquire Nicira for approximately $1.05 billion in cash plus approximately $210 million of assumed unvested equity awards. The acquisition is subject to regulatory approvals and other customary closing conditions.

VMware to Acquire Nicira (NYSE:VMW)

Now, I’ll agree that these companies are at different stages of maturity and that buying Nicira was much more of talent, team and patent acquisition while AirWatch has real products and revenue. But VMware is paying the same amount for an MDM as they did for an entire SDN strategy and entry into the networking market. Both acquisitions are a significant chunk of VMware relatively small annual revenue of slightly more than USD$5 Billion.

It’s a salient reminder that networking is a service foundation but isn’t actually all that valuable in terms of delivering revenue. Keep a sense of perspective. A gear box in a car is a useful component but it’s not the whole car.

 

About Greg Ferro

Greg Ferro is a Network Engineer/Architect, mostly focussed on Data Centre, Security Infrastructure, and recently Virtualization. He has over 20 years in IT, in wide range of employers working as a freelance consultant including Finance, Service Providers and Online Companies. He is CCIE#6920 and has a few ideas about the world, but not enough to really count.

He is a host on the Packet Pushers Podcast, blogger at EtherealMind.com and on Twitter @etherealmind and Google Plus

You can contact Greg via the site contact page.

  • http://twitter.com/abnerg abnerg

    Agree. Half a snapchat doesn’t buy what it used to. Also consider that while the post acquisition investments for integrating both of these are significant, Nicira is likely to be larger in the long run given the need to go out and make a new market.

  • Shamus McGillicuddy

    Estimates put AirWatch’s annual revenue at $100+ million. It also has an R&D department of 500 people, according to Research & Markets. That seems rather high to me… but if true that’s a good chunk of MDM talent.

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