Mobile device management (MDM) had its first billion dollar exit last week, when one of the leading startups in the space, Airwatch, was acquired by VMware for more than $1.5 billion. An eleven year old Atlanta-based company, Airwatch has more than 10,000 customers and between $125 and $150 million in revenues.

From a technology trends standpoint, there might be some headwinds around the MDM space. The first question is whether mobile can become a decent end-user compute platform, and the second question is whether mobile data or application management, wherein the focus is more around managing and securing data and apps rather than managing the end-point device, is the better approach. Both of the above will impact the long term need and growth prospects for MDM. However, all things considered, Airwatch still looks like an excellent fit for VMware.  VMware has recently been focused on mobile virtualization, which is likely complementary to Airwatch’s MDM suite. Airwatch also likely brings key new customer relationships to VMware, while at the same time helping VMware ward off competitor Citrix (which purchased smaller MDM player Zenprise in late 2012). As VMware goes up against Amazon and Microsoft and Google on the server virtualization front, this mobility play opens up another flank for the company. Most importantly, this acquisition strengthens the EMC family significantly. Pivotal already has strong capabilities around mobile data architectures (via the Pivotal Labs acquisition) and mobile app development (via the Extreme Labs acquisition). It will be interesting to see if components of Airwatch’s technology make it to Pivotal to help Pivotal become a full stack mobility services provider to the industrial internet.

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Last week saw one of the largest venture-backed private company acquisitions in recent memory, when Google purchased smart thermostat and smoke detector maker Nest Labs for $3.2 billion. As has been widely reported, Nest boasts a rockstar team of more than 300 employees, led by former iPod guru Tony Fadell. The company is estimated to be shipping approximately 100,000 of its thermostats every month, which at $249 per thermostat translates to an annual revenue run-rate of approximately $300 million.

A number of interesting viewpoints have emerged post the acquisition. First, does this represent the second coming of energy technology? Probably not… In many ways, Nest represents the same business approach that has made Apple and Tesla successful – develop a high-end device that offers amazing user experience, and over time build and nurture a loyal, high-margin user base. So, while a case could be made that Nest’s smart learning algorithms offer say a one to two year payback over traditional programmable thermostats, likely that is not the key selling proposition. The key selling proposition is one around design, just like for the iPod. Second, did Google overpay in this case? Again, likely not… Google the company is built around web and mobile driven marketplaces and two sided networks, yet the company has astutely identified the internet of everything (connected cars, home endpoints and the like) as the next secular megatrend, and the way to participate in this megatrend beyond pushing Android OS is to focus on product design, something that Nest Labs uniquely offers today. And along the way, even if Nest can sell its thermostats and smoke detectors into 3% of the United States’ 135 million households, that itself represents between two and four billion dollars in revenues to Google.

The first step towards the Internet of Everything gaining broad-based prevalence is to achieve scale within its infrastructure layer (end-points and their cloud-connectivity), which in turn is a segment that consists of a host of large corporates as well as startups such as Opus portfolio companies GainSpan and Arrayent. Can Nest become the rising tide that lifts all boats within this infrastructure layer? That seems like the bet that Google is making, and if the bet works out then Google’s billions will have been well worth it.

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Last week saw a couple of interesting announcements from T-Mobile, pertaining to the US carrier ecosystem. First, T-Mobile announced its preliminary Q4’13 quarterly results last week, which showed the carrier had added a staggering 1.6 million net new subscribers during Q4’13. Net new subscribers added over all of 2013 were 4.4 million. T-Mobile’s total year-end post-paid and pre-paid subscriber base for 2013 was just more than 37 million. Second, T-Mobile also announced that it would offer up to $650 in credits to folks that switched from other carriers to its own services (up to $350 in early termination fees for contract breakage + up to $300 in credit for trading in the user’s old phone).

Over the past year or so, T-Mobile has used some interesting tactics in trying to gain net new subscribers. In Q3’13, the company had announced that it would provide its services without a contract (but with still a pseudo-contract in the form of the user paying the cost of the subsidized phone over a two year period). While the other carriers have responded in kind to these tactics, clearly T-Mobile has succeeded so far. But how sustainable is this success for T-Mobile? T-Mobile currently lags the other three major carriers in wireless infrastructure build-out, spectrum capacity and cash-assets, which intuitively seem to together represent a vicious cycle that might result in increased customer churn and net subscriber losses in the medium term. On the flip side, maybe for a number of urban markets, T-Mobile’s coverage is ‘good enough’, in which case the company might see continued net new subscriber addition due to its seeming consumer-friendliness. Which of these two possibilities get realized will determine whether T-Mobile emerges stronger over the next year or so, or whether its performance relapses into mediocrity.

On a broader note, these un-carrier wars will likely bring other aspects into the spotlight: Should smartphones (iPhones included) really cost $600 each to the end-user? Is there really space for four major carriers in today’s capital-intensive wireless environment? Can small-cells and WiFi hotspots and WiFi calling help disrupt the carrier tiered-pricing model? Clearly, T-Mobile is stirring the pot, so we are in for interesting times ahead!

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