It's hard to believe that a company could burn through $225 MILLION dollars in 11 months, but it looks like that may have been exactly what AirWatch did. According to data released by AirWatch and written by financial analysts (links to all data sources at bottom of post), AirWatch likely had burned through nearly all of its available cash in record time. Based on an assumption of $120K burn per employee (fully loaded) per year and an assumed removal of $50M in equity at the time of the venture round, AirWatch would have had somewhere between 5 and 6 months of runway left as of January 2014. These assumptions are corroborated by the fact that VMware has contractually extended AirWatch an offer to provide a bridge loan if the acquisition deal does not close in the next 6 months.
What did AirWatch do wrong? It sounds like they may have made some over-assumptions with regards to their growth rates for 2013. It could have possibly been the adoption rates in countries outside of North America. It may have just been bad luck. Or it could even be a cooling off of interest in mobile device management technologies based on containerization. We won't know exactly why they were getting near the end of the runway, but what we can say is that VMware may have overpaid in multiple. Based on the data provided by VMware of AirWatch bookings for 2013, VMware paid somewhere around 16x bookings for AirWatch. Man, that's a lot of bread!
On January 22, 2014, a new mobile security player was born. This is the date that VMware announced its intention to purchase the mobile device management (MDM) firm AirWatch. With a price tag of $1.5 billion, this acquisition confirms that the mobile security market is scorchingly hot. This news comes on the heels of the November acquisition of Fiberlink by IBM. I expect additional mobile security market consolidation to occur throughout the remainder of 2014. This acquisition is a shot across the bow of any other major vendor looking to play in the mobile security market. If you don't step up and spend now, you might just be left holding the bag.
AirWatch held its EMEA AirWatch Connect customer event in London recently. The event underlined that AirWatch, at the tender age of 10, has become one of the leading global providers of enterprise mobility services. My key takeaways from the event are that:
Secure collaboration forms the center of the connected business. Business productivity and innovation benefit significantly from a workforce that is empowered by mobility. AirWatch has one of the most comprehensive enterprise mobility portfolios in the market to support this drive. AirWatch can play a central role for any organization that is transforming into a connected business.
An integrated platform approach to enterprise mobility has a clear advantage. AirWatch pursues a Lego-block approach, bringing together solutions for email, browser, containerization, content locker, and, of course, device and app management. By building its solution as one platform, customers gain the flexibility of a Lego-style deployment — they can pick only those blocks that they require while ensuring the integration and flexibility of the overall solution.
Building a business case for enterprise mobility must include soft factors. Managers who build ROIs for enterprise mobility solutions usually focus on hard KPIs that support existing ways of doing business. However, this “hard ROI” approach really only compares the present with the past. In reality, it is often the soft KPIs, like new ways of doing business, that matter more. Ultimately, mobility is crucial for greater operational flexibility and business transformation. Both are at the heart of long-term business success.