BARCELONA, Spain--On Monday VMWare completed its $1.2 billion acquisition of AirWatch, adding one of the premier mobile device management (MDM) companies and gaining a major foothold in the wireless market to better compete with BlackBerry (NASDAQ:BBRY), IBM, Citrix and others. AirWatch Chairman Alan Dabbiere had harsh words for BlackBerry, and said the company is clinging to the past and business models that no longer work.
In an interview with FierceWireless, Dabbiere spoke at length about the deal with VMWare and what it will mean for AirWatch as the enterprise mobility market evolves. However, when questioned about BlackBerry as a competitor, Dabbiere did not hold back and said that "hope is not a strategy" for the company as it seeks a turnaround under CEO John Chen and a mostly new management team.
Earlier this week BlackBerry said BlackBerry Enterprise Service 12 will come out before the end of the year, and that in addition to Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS devices, BES 12 will also support Microsoft's (NASDAQ:MSFT) Windows Phone. The BES 12 platform will offer backward and future compatibility, unifying BES 10 and BES 5 on to one platform.
To help spur adoption of BES 12, BlackBerry launched an "EZ Pass" program, which will let customers move from BES and other mobile device management platforms to BES 10. For existing BlackBerry customers, the EZ Pass program will match any active existing on-premise BES license and any active license customers may have from other MDM vendors with a corresponding Silver BES 10 perpetual license, though terms and conditions apply. BlackBerry is also simplifying its BES pricing and licensing structure.
Dabbiere said BlackBerry "rehashed the exact same thing they have been saying for three years." He also said BlackBerry's plan to roll out BES 12 by year-end and not now risked putting it further behind the curve. "That's the most obscene thing I've ever heard," he said. "My jaw dropped when they said, 'this is what's coming.'"
AirWatch has been certified as an MDM provider by major governmental and commercial organizations, including the U.S. Department of justice, Saudi Aramco, Chevron and others, Dabbiere said. "We've been vetted by the largest organizations in the world and we're replacing BlackBerry because we're as, if not more secure."
The AirWatch chairman said he did not think the likes of Apple and Samsung Electronics would give BlackBerry access to their APIs so that their next-generation smartphones could run on BES. That, he said, cuts to the heart of BlackBerry's troubles. "I think they've got to be in the hardware business or the vendor-agnostic security business," he said. "I don't think they can be in both."
Dabbiere added that BlackBerry "is being delusional in the marketplace saying they can secure devices of their competitors when they don't work with them."
In response, John Sims, the president of the company's Global Enterprise Services business, wrote in an emailed response that the company's $3.2 billion in cash and mobile enterprise customer base that is 10 times the size of the next largest player "will enable us to execute on our strategy to serve the needs of government, regulated industries and large enterprises with our unparalleled secure, productive and collaborative mobile experience."
"Our less secure competitors claim that security is not important, but that is not what our customers say. They continue to demand a level of security and privacy that only BlackBerry can provide. We are the first EMM provider to obtain 'Authority to Operate' on U.S. Department of Defense (DoD) networks. Across the globe, seven out of seven G7 governments are also BlackBerry customers. No other company can match our presence in government today," Sims wrote. "As we have articulated our strategy and announced key elements of our roadmap, our customers and partners have applauded our focus, decisiveness, and clarity of purpose. Our competitors never say we have inferior products--and they are right. We have the best security, productivity and collaboration experience in the industry."
Sims said BlackBerry realizes that "execution of strategy is what really counts, and we are delivering now on our newly articulated vision and roadmap with BBM Protected and BES 12, clearly demonstrating to our customers and competitors that we will continue to lead."
Dabbiere acknowledged that BlackBerry has "a great asset," most notably its QNX Software Systems subsidiary. Earlier this week, Bloomberg reported that Ford Motor Co. will soon ditch Microsoft and base its next-generation Sync system on QNX.
"John Chen and management is messaging their past, instead of saying, we're going to be the leaders of M2M in the enterprise," Dabbiere said. "He is fixating on telling everyone there's not a problem in the BlackBerry phone business and BlackBerry server business. I don't hear the message about Ford as loudly. He's not creating a clear vision and picture of where BlackBerry should be going. [Chen is] hanging on to his historic buildings and charging to go see it."
In another separate response, Alec Saunders, Blackberry's vice president of its QNX Cloud business noted that "the biggest challenge in the Internet of Things space is simply gathering the data from devices to make analysis possible. It requires a marriage of mobile+cloud+embedded devices. QNX enables tens of millions of devices every year, with a 37% CAGR in the last 5 years, and BlackBerry and QNX have a unique combination of mobile+embedded+cloud expertise and assets required to execute on this opportunity."
He wrote that "M2M is transforming itself into the Internet of things, driven by new opportunities for customer engagement, and the promise of big data analytics. The story is not about taking a mobile MDM platform and adapting it for M2M. There are new requirements to truly address the space and move towards IoT and Big Data. Our IoT strategy will ensure we deliver the functionality that is required for this evolution of IoT and Big Data. With all due respect to Mr. Dabbiere, traditional device management players do not have the scope or depth of understanding to truly facilitate a long-term solution."
Beyond the tussle with BlackBerry, Dabbiere said VMWare's strong position in the cloud market and operating system virtualization will be a major help. "They are truly technologists," he said. "These are some of the smartest guys in the world."
He said VMWare brings scale, technology and a large customer base. Additionally, a large percentage of AirWatch's costs was from cloud infrastructure and data centers, since 80 percent of AirWatch's customers use cloud-based MDM solutions. Because AirWatch used data centers run by VMWare and VMWare parent EMC, it will cut down substantially on its costs. "This was a merger about getting the MDM war over and moving onto the next bastion of what we need to win to get to be a wildly successful company," Dabbiere said.
The AirWatch team will continue to report to co-founder and CEO John Marshall as part of VMware's End-User Computing group, which is led by Sanjay Poonen, the executive vice president and general manager of the group. Dabbiere will be overseeing a new AirWatch operating board which will report to VMware CEO Pat Gelsinger. Dabbiere stressed that at 1,600 employees the AirWatch team is twice the size of VMware's End-User Computing group and will remain largely independent.
MobileIron remains a competitor to AirWatch. There have been recent reports from Bloomberg and the Wall Street Journal that MobileIron is preparing an initial public offering. "MobileIron going public will be much more disruptive to their business, given the quarter to quarter nature of that business," Dabbiere said.
"With regards to our business, we don't have anything to share at this time," MobileIron spokeswoman Clarissa Horowitz said. "We are focused on delivering the technology, best practices, and customer support that our customers need in order to make mobile technology a strategic business advantage."
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