VMware is advancing deeper into Citrix territory with the acquisition of AirWatch, a privately-held developer of mobile device management (MDM) software based in Atlanta. The deal is valued at approximately $1.54 billion (mostly in cash) and is expected to close later this quarter subject to regulatory approval and customary closing conditions.

The 11-year-old AirWatch had established itself as the largest independent vendor in the burgeoning enterprise mobility market, with more than 1,500 employees across nine global offices and the biggest engineering team in the industry, according to its website. The company claims that over 10,000 organizations in 150 countries use its software suite, which includes tools for managing mobile applications, securing data on employee-owned devices and providing consistent levels of service throughout an organization.

“AirWatch provides best-in-class, secure, enterprise-mobile management to thousands of businesses around the world,” said Pat Gelsinger, CEO of VMware. “With this acquisition, VMware will add a foundational element to our end-user computing portfolio that will enable our customers to turbo-charge their mobile workforce without compromising security.”

VMware’s Sanjay Poonen

AirWatch will be folded into VMware’s End-User Computing group, which is led by Executive Vice President and General Manager Sanjay Poonen. VMware’s End-User Computing group includes another new addition called Desktone, a desktop-as-a-service provider that was acquired last October. AirWatch co-founder and chairman Alan Dabbiere will remain at the helm of his firm and report directly to Gelsinger.

“When we started AirWatch, we set out to help businesses succeed in the mobile explosion that was set to come. Now there are more than 2 billion smartphones and tablets in the world and more than half of those devices touch an enterprise,” Dabbiere said. “By joining a proven innovator like VMware, we now have an opportunity to bring our leading-edge solutions to an even broader set of customers and partners to help them optimize for the mobile-cloud world.”

Gelsinger is diversifying beyond virtualization in an effort to navigate VMware through the wave of commoditization that is sweeping through the data center and threatening to disrupt its core hypervisor business. While crowded, the enterprise MDM market represents a multi-billion dollar opportunity that will grow over time as the Internet of Things continues to expand.

Sanjay Poonen putting his mark on VMware with Pat Gelsinger rapdily expanding the end user computing enterprise capabilities.  Here is SiliconANGLE founder John Furrier and Dave Vellante founder of Wikibon in-depth interview with Sanjay @spoonen at VMworld 2013.

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Suzanne Kattau contributed to this story.