Well, that's interesting news - now what?

Big news today - was an interesting day, I was with 3 customers in joint meetings with VMware.   With the announcement (http://www.vmware.com/company/news/releases/executive_leadership.html) of the change in VMware CEO, it was... unsurprising.... that it was a big part of the dialogue - both with the customers and with VMware folks.

So, for what it's worth - what do I think (for that read on), and what do YOU think?

First of all - I had no idea this was going to happen.   If this surprises anyone - it shouldn't.   It is a true statement to say that VMware does indeed operate as a separate independent company.   The decision was by the VMware board, and EMC operates as a partner to VMware.  I suspect I found out the same moment that my peers at IBM, HP, Dell, NetApp, HDS, etc.

People get confused because Joe is the chairman both of the EMC and VMware board - but like many people on boards, he needs to operate with a strict chinese wall - and he does that with aplomb (at least from where I sit).

Clearly the market reaction was rough, and man, I felt that one. 

That said - the market response to something unexpected is always going to be rough - the real proof of whether this is a good thing or a bad thing isn't in today, or tomorrow, but how this affect VMware employees at large in the mid and long term and by corollary, VMware's ability to continue to innovate, execute, and continue to dominate the market it created.

Chuck did a good post - and has links to other people's articles at both ends of the spectrum - here: http://chucksblog.typepad.com/chucks_blog/2008/07/commentary-on-c.html

I've been caught once in the Register's PR game (i.e. I say one thing, and they quote something totally different because they want to propagate something inflammatory), and as a reader (and a human being), I can't help but love reading their super hyperbolic articles - it's like watching a car crash.  While it makes for interesting reading to caricature Joe and Diane and EMC and VMware - I really don't think this was for relationship issues and egos.   I like Diane just the way she is - and hey, Register, I'm really short and a sailor too, but I don't think I'm hard to get along with :-)  

So what's it about, and what does it mean?   Well, I can tell you what I think.   Remember - this is a simple man's opinion - and fundamentally I'm a technologist, not an expert on macro-level business.

• This is not "EMC exerting control" - it was a change the VMware Board unanimously (excepting Diane of course) wanted.
• Paul Moritz is getting characterized by some as "an EMC guy".   This has me scratching my head...  It seems to me (I've never met the guy) he'd be better characterized as "a senior former Microsoft executive with experience managing organizations through the 'billion to billions' growth phase".   The board decided they needed a change - this fellow was a top-notch candidate and happened to be right on hand, but he's certainly not "an EMC guy".   He was also a key senior exec at Microsoft, and well regarded by his team, the company at large and the market.   When he left from Microsoft clearly frustrated, it was a blow - and I think he's ideal to lead the fight Microsoft in this new battleground.
• Diane should be (and is by me) respected for what she and Mendel (and the other 3 founders) created - we all know that VMware is the foundation of many of our customers core "next generation datacenter" plans.   This followup to the Windows IT Pro article that got me so steamed says it all when comparing VI3.5 and Hyper-V.   That doesn't change. 
• The board decided that for the next stage of growth of VMware to $2B and beyond, new leadership was needed - and this is very common as companies grow through stages of life.
• This doesn't change VMware's independence or EMC's partnering model with VMware one iota.
• VMware will go on, continue to innovate and grow.   The strength of VMware is a killer product set that customers love and continued innovation - VI3.5 and the "managers" aren't the end, they are the beginning :-)   Just think - it wasn't the death knell of EMC when Moshe left(was pushed out) - in fact it was a huge event, with huge impact, and huge change - but not a death knell.   In fact, it marked a new phase of EMC's corporate life.   Just like with EMC when Moshe left, while I hope that Mendel can continue to contribute, but there is an ARMY of the smartest Virtualization engineering talent at VMware - looking every day for fun problems to solve.

Great companies are about more than any one person.

To me, this is simple.

At EMC, we need to continue our manical focus on being the best choice for Information Infrastructure in VMware environments - and being the right partner - by choice - for customers and for VMware themselves.  

In turn, VMware needs to continue their manical focus on being the best choice for server/desktop virtualization, datacenter automation, and cloud computing.   

That's what I get up every morning trying to do on the EMC side, and I know that it's what thousands of people at VMware get up every morning trying to do.

That's what I told the customers, and that's what I told the VMware field folks - and it's what I believe.

Curious for your thoughts.

Comments

[Daniel Eason]

Chad,

Great read, the news comes of no surprise to myself. If you honestly need to grow as a company into something unprecidented compared to your competitors you need more experience, this is the case in any business.

It's a shame DG couldnt have been made chairman or CIO/CTO just to keep customers coming in knowing that the founder still has an influence.

It is a sad day for Vmware's heritage but I am sure that in a few years time that this saga will more than be forgotten!

Dan

[Marty]

Chad: "Paul Moritz is getting characterized by some as "an EMC guy"."

I'm not sure what Paul has been doing since his company was acquired by EMC, but what else would you call him? It's not like he's been unemployed recently!

"The board decided that for the next stage of growth of VMware to $2B and beyond, new leadership was needed - and this is very common as companies grow through stages of life."

It's not readily apparent to the rest of us why Diane was not capable of doing this. It looks like she was a scapegoat for the profit forecast downgrade, but in case no one has noticed the USA economy is at a standstill (if not in recession).

"Great companies are about more than any one person."

Agreed, but the CEO is such a high visibility position that the public and the markets place such a heavy emphasis on. This spill doesn't have the appearance of clean, tidy and warranted. The VMware board should have done a much better job of making the case for change.

[Terry]

The ousting of Diane Green reminds me of what the Mets did to Willie Randolph. Can't we all just get along.. Was Joe afraid that Intel was going to acquire VMware? Does Joe think a former MSFT exec will know how to go to market better against his former employer?

Was this a strategic or tactical move?

It's funny you mention cloud computing, since this was an area Paul was focusing on. This is an area VMware needs to research heavily in as compute cycles will eventually be a commodity just like electricty. Hopefully the OVF format will be something all virtualization vendors will adopt as it makes the most sense in the CC space.

BTW, it's Maritz and not Mortiz. ;)

[Chad Sakac]

Terry - thanks for the comment.

I've said it before, and I'll say it again - I think that where people see complex machinations and people operating with multiple shadow motives, while SOMETIMES that's the case - far more often it's one level deep, and the simple truth is the truth (though far less fun)

I will tell you that both VMware and EMC are thinking about the cloud model (whether the CPU cycles/Memory commodity you are using are in a cloud in your building or a cloud on the internet) and all the implications it can and will have on all our technology, customers, and busnesses.

Heck - I export all my VM's as OVFs - it still needs some work - import makes everything eagerzeroedthick (yuck), and has more limited Guest OS support - but I think there's a lot to come on that front.

At EMC, all the product teams have been been put on notice - every product must be made available as a Virtual Appliance, and we're commited to staying in sync with VMware's Virtual Appliance standards and programs.

Thank's for the correction on my vowels - I better get it straight in my gig :-)

[Keith]

Chad,

Nice insight. I suspect more asperation from the board and Joe around progression towards cloud computing. Operations at large scale? Sure and that's cute but the real jewel that scales the demand; cloud. Move from the OS of the "new house" datacenter to the Cloud OS and tools... hello! I hope he has mojo.

[Chad Sakac]

One quick one (just because a customer in Baltimore brought this up to me this week as we were discussing the whole saga) - on the "how can you not characterize Paul Maritz as an 'EMC guy'?"....

The acquisition of PI happened in Feb - http://www.reuters.com/article/pressRelease/idUS250001+21-Feb-2008+PRN20080221

I mean, that's so recent, it's even worth pointing out it was Feb **21st**. I don't know about you folks, but to me, it feels like I blinked, and it was 5 months ago.

The customer mentioned that PI was acquired 14 months ago - heck even that wouldn't have been enough time to be "EMC indoctrinated :-)"

It did turn out (either by big conspiracy theory, or by lucky circumstance) that Paul was available when the VMware board decided it was time to make the change - but an "EMC guy" - I dunno, it just doesn't seem that way to me (though I guess I can see how people may come to that conclusion).