This morning VMware announced plans to acquire BlackBerry MDM competitor AirWatch. The mostly-cash transaction is valued at $1.5 billion. For those unfamiliar with VMware, it is a publicly traded company in the virtualization infrastructure market. It’s a very large company valued at over $40 billion compared to BlackBerry’s $7 billion (Note: I’m counting the convertible stock as equity for purposes of market cap calculation).
The good news is this validates the importance of mobile device management, a core focus for BlackBerry given CEO Chen’s emphasis on this segment. According to BlackBerry, the Canadian vendor has more than 10x as many customers supported by its BES platform than the next largest dedicated EMM (enterprise mobility management) vendor.
You could say that, all else being equal, BlackBerry should therefore be worth at least 10x what AirWatch is worth, giving the company a market cap of at least $15 billion. But things aren’t equal, so it’s not so easy to say this. First of all, BlackBerry has been fighting negative momentum over the years, so it has to turn this around. We think this is starting to happen, but it’s early days. Secondly, BlackBerry also has BBM, QNX and a device / OS business which may or may not ever turn profitable. So these extras should be valued separately when comparing a company like AirWatch to BlackBerry.
The bad part? VMware is a giant, and we now have a company with 6x the market capitalization of BlackBerry buying a major competitor. The financial power of the competition just got bigger.
Some might argue that VMware is reacting to the need to be in the mobile market, which it really isn’t today. So VMware doesn’t have any kind of history or special knowledge in mobility, which bodes well for competitors.
Here’s what I’m hoping will happen: The VMware deal closes, and we get a bunch of AirWatch employees who used to work for a relatively small company (1,600 employees) and now feel like a number. The good ones decide it’s time to depart, and go work for BlackBerry. :)
Hey, I can always hope. Takeovers usually result in employee turnover.