The passing of the baton at VMware

  • Virtualization player VMware gets new head while predecessor heads back to parent company
  • While company is still a leader in the industry, new chief faces tough task to maintain leadership

The passing of the baton at VMwarePeriscope by Edwin Yapp

THE enterprise world begins a hattrick of multinational global conventions within a month's span beginning with VMworld this week, followed by Salesforce.com's Dreamforce conference on Sept 18 to 21, and rounding up with Oracle Open World come Sept 30 to Oct 4.
 
Having been to quite a few of these tech extravaganza before, I can tell that amidst the myriads of announcements -- strategy and products  -- there is also a lot fanfare and much jargon being bandied about like cloud computing, virtualization, software-defined data center (SDC), big data, as well as lot's of other proprietary product terminology.
 
But underneath these product announcements and fancy launch gambits lie the common theme -- that the companies hosting these conventions are trying to keep existing customers while taking more market share away from competitors.
 
This week in San Francisco, that's exactly what virtualization and cloud player VMware is going to do at its annual VMworld conference.
 
Amidst the multitude of product announcements and visionary addresses, one event that stands out is the handing over of VMware's reins from its CEO of four plus years, Paul Maritz to Pat Gelsinger (pic, left to right), who is currently president and COO of EMC, VMware's parent company. Gelsinger, the former CTO and general manger of Intel prior to his time at EMC, however does not officially start as CEO of VMware till Sept 1.
 
The passing of the baton at VMwareNews of this transition broke a month back and and while the industry expected the move, the same can't be said about why it's happening. Bloomberg had an interesting report and noted that the management change follows "a growth slowdown that has dragged down shares 3.5% this year at VMware."
 
The business news portal noted that the move puts Gelsinger in charge of VMware’s push beyond servers into other areas of information technology, such as storage, security and networking.
 
Brian Marshall, an analyst at ISI Group, said in a research note that EMC is making management changes from a position of strength to address large new opportunities. "The areas of potential growth include the entire IT infrastructure beyond VMware’s roots in server virtualization," Bloomberg quoted him as saying.
 
Maritz will assume the role of chief strategist at EMC, who will report to its chief, Joe Tucci. The 65-year-old Tucci was slated to resign this year but was persuaded to stay on till the end of 2013. Meanwhile, EMC CFO David Goulden, meanwhile, has been promoted to president and chief operating officer and will retain the CFO role.
 
While some may feel that Maritz has taken VMware as far as he can, the 57-year-old former Microsoft executive has to be given credit where it's due.
 
Quoting analyst Mark Moerdler, an analyst at Sanford C. Bernstein & Co, Bloomberg noted that "it’s clearly a move up for Gelsinger, and that moving Maritz to EMC as strategist means they weren’t unhappy with him.”
 
When he first took over VMware in 2008, Maritz, who spent 14 years at the Redmond, Washington giant, was then president of EMC's cloud computing division, and did so at a tumultuous time after VMware CEO and co-founder Diane Greene had been ousted by the board.
 
At the time, VMware's stock prices took a hit on news that it was lowering financial expectations, according to IT portal Tech Target. Some also felt Maritz appointment was surprising but VMware's fortunes turned quickly and he was able to steer the company out of trouble and established it firmly as a leader in the virtualization space.
 
Gelsinger's accession, however, comes at a time that VMware is being aggressively challenged by various competitors including leading names like Microsoft, Oracle, and Citrix Systems.
 
But when asked about this at a press conference on the opening morning, Maritz gave a very well coordinated response to the tune of waving Microsoft off as not a big competitor in this space.

Still, at a joint press conference, both Maritz and Gelsinger were all smiles fielding questions from the international press.
 
"The first thing I'm going to do at the end of this week is to breathe a huge sigh of relief," Maritz quipped.
 
Asked what his new role was going to be like, Maritz said he is excited about things that can be done on top of [VMware's new capabilities].
 
"We are moving towards a way to assemble and deploy computing resources like never available before," he said. "This is coming at a time when businesses are having to rethink the experiences that their users want to see. People don't want to see the same old stuff done before.
 
"We are also seeing the age of the Internet of things, where everything from a fridge to a jet engine, is going to be attached to the Internet and report data back. The amount of data that is going to flow in to enterprises is going to increase probably by a factor of 100 times.
 
"And you can't pour all that data into a traditional centralized relational database and expect to make headway with that. We need new ways of thinking about doing things, and that's what I hope to spend the next several months thinking about and who knows what will come out of it."
 
As for Gelsinger, he has his work cut out for him as he steers the ship towards what can be only be described as a new era for VMware and having broad-based experience at Intel bodes well for him.

David Johnson, senior analyst, desktop, mobile infrastructure & operations, Forrester Research, noted that the hand-off from Maritz to Gelsinger went well.

"Maritz is a class act, while Gelsinger looks to be cut from EMC cloth, which is to say intense," he told Digital News Asia in an e-mail. "However, it's not yet certain whether that's a plus [point]. Also, we'll see if he can muster the talent in the organization needed to execute [VMware's plans and vision]."
 
Time will tell if he can succeed but until then, have a read of this report on GigaOm for more details on the challenges facing VMware.

Edwin Yapp of Digital News Asia reports from VMworld 2012 in San Francisco, California

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