Diane Greene out, Paul Maritz to lead VMware

While working in San Francisco, I received quite a number of telephone calls from journalists around the world. Since I was "off the grid" for the project, I had no idea what was going on. I finally returned to my hotel room and could read my messages, I learned that VMware's board had ousted the company's founder and long-time CEO, Diane Greene. I also learned that Paul Maritz, retired Microsoft executive and current CEO of another EMC business, the Cloud Division, was put in charge.

Here are a few short snippets of the message I received annoucing this change.

VMware’s Board of Directors announced today that it has made a change in the leadership of the company with the departure of Diane Greene as President and CEO. VMware’s Board of Directors has appointed Paul Maritz as President and CEO of VMware effective immediately.  Maritz was also named to VMware’s Board of Directors.

Joe Tucci, Chairman of VMware's Board of Directors said “VMware is in a tremendous position to extend its lead in the virtualization market. VMware’s Board of Directors is very pleased to be able to appoint an executive with Paul’s experience and track record to lead VMware to its next stage of growth and development. Paul is a leader in the software industry. He has decades of experience building one of the greatest franchises in software history, Windows. Paul was instrumental as part of the core executive leadership team in building much of Microsoft’s success.

Snapshot Analysis

VMware finds itself in a challenging position. It's the premium brand in the virtual machine software market and commands a premium price for many of its products. The company faces strong competitors such as Microsoft, Sun, Oracle, Virtual Iron, and members of the open source community such as Red Hat and Novell/SUSE. It appears that VMware was not going to meet analyst revenue estimates and so the board decided to take quick action. It brought in someone with a intimate knowledge of Microsoft's inner workings and the company's approach to marketing to help.

Even with Paul Maritz's guidance, VMware faces a challenging environment.

Here's a snippet of a snapshot analysis published in a previous post, Microsoft Releases Hyper-V.

Let’s consider what’s already in the field, satisfying customer demands:

• VMware, the industry lion, has many versions of its technology and is in the middle of the lifecycle of the version 3.5 release. The company has significantly improved the stability, reliability, manageability and performance of its hypervisor. It also has developed a strong portfolio of products in the areas of access virtualization, application virtualization, management (provisioning, streaming, administration, orchestration, automation, clustering, HA/Failover).
• Citrix/XenSource, the industry jaguar, is fielding its distribution of Xen, the open source hypervisor, combined with a strong portfolio of products that matches that offered by VMware.
• In the Xen camp we also find Linux distributions such as Red Hat, SUSE and a host of others as well as large suppliers such as Oracle, Sun and Virtual Iron. All jungle cats from the very small to a medium size.
• In the KVM camp we find Qumarnet (the originators of KVM) and Red Hat.

It’s clear to see that this is a very diverse, competitive market. It is also clear that all of these players have strengths that just may match a specific organizational need better than the others. Although VMware is the dominant player, the market is certainly not a one company show.

Although VMware's future course is not clear, what is clear is that the company's "personality" and business approach is likely to change dramatically. It's not yet clear that current customers will appeciate the changes. If Paul attempts to make VMware more "Microsoft-like" customers may reason that if the choice is between Microsoft and "Microsoft-like" it may be wise to just go with Microsoft.

It is also clear that the market for virtual machine software is commoditizing rapidly. It will be difficult for VMware to charge a premium price when others are offering "good enough" technology essentially for free.

How do you think VMware will change?