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EMC taps ex Microsofter Maritz to fend off Microsoft Hyper-V

It takes one to know one. At least that’s what EMC hopes as it appoints former Microsofter Paul Maritz to head up its lucrative VMWare unit, not coincidentally on the same day that Microsoft formally released its much anticipated Hyper-V to market.
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Written by Paula Rooney, Contributor on

It takes one to know one. 

At least that’s what EMC hopes as it appoints former Microsofter Paul Maritz to head up its lucrative VMWare unit, not coincidentally on the same day that Microsoft formally released its much anticipated Hyper-V to market.

The departure of longtime VMware CEO and president Diane Greene is no doubt a big loss to EMC and VMware employees and customers.  The industry vet has done an excellent job building and maintaining VMware’s mega empire both pre and post EMC’s acquisition in 2003. She even fended off Microsoft’s half baked attempt to acquire the virtualization company before EMC’s move. Instead, Microsoft bought Connectix and rebranded that software as Microsoft Virtual Server to compete aginst VMware ESX. Go figure.

So the VMware board of directors thinks it’ll take a Microsoft veteran to fend off Redmond’s more serious re-entry into the virtualization software market.  Maritz, a 14-year Microsoft exec who joined EMC just months ago, certainly knows the top brass at Microsoft, the way they think, the way they do business, the company’s pricing and licensing strategies, their joint customers, and likely enticements that will be used to win defectors. 

The appointment of Maritz – on the same day that Hyper-V shipped – informs Microsoft and the market that the new president and CEO of VMware has the Redmond playbook and knows its tricks.   And it signals that the battle will indeed get bloody.

Still, I was a bit miffed by the way EMC opted to color Greene’s departure, insinuating that the change in leadership had something to do with lower than expected earnings coming up later this month.  Greene was able to fend off Microsoft’s early overtures to VMware and keep the company independent of EMC’s grip, all while generating staggering growth during the past five years. Last I heard, CEOs who generate 50 percent growth rates – or even “modest” sums below that, don’t get thrown under the bus.  Here’s what the press release said today about the change of leadership and upcoming annual earnings call.

“On that call Paul [Maritz] will make observations about the second half of 2008. While VMware is not updating guidance for Q2, we expect revenues for the full year of 2008 will be modestly below the previous guidance of 50% growth over 2007.”

Okay, so the stock has been down. But here's the real deal: EMC is very worried about Microsoft’s re-entry into the virtualization market and thinks it will take a Microsofter to fight Microsoft.  EMC has a right to be worried.  Microsoft will very likely give the code away essentially free and probably even services free to lure enough enterprise accounts away from VMware to Hyper-V.  But Maritz can’t do anything about that. EMC hopes Maritz can steer the company through the war, stem the flow of blood, maybe even reach an accord with his former company. We shall see.  

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