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VMware Preps Its Next Act

VMware Inc. (NYSE: VMW) is changing CEOs, confirming rumors that spread Monday, and analysts' best guesses so far are that it's part of a major strategy shift for the company.

Paul Maritz will step down as CEO on Sept. 1, the company announced Tuesday afternoon, confirming a report that CRN published late Monday. He'll be succeeded by Pat Gelsinger, president and chief operating officer of infrastructure products at EMC Corp. (NYSE: EMC), VMware's parent company. (CRN reported that part in a follow-up Tuesday morning.)

The industry knows Gelsinger well from his 30 years at Intel Corp. (Nasdaq: INTC), where he served in a highly visible stint as chief technology officer.

Maritz, meanwhile, will stay on EMC's board. CRN had speculated he could become EMC's CEO if Joe Tucci was prepared to leave that post, but a source told The Wall Street Journal Maritz might become EMC's vice chairman instead.

VMware isn't having the kinds of problems that normally lead to a CEO ouster. To use an analogy (and a cheap shot), VMware's situation is more Apple Inc. (Nasdaq: AAPL) than BlackBerry .

"I don't see them in trouble at all. I see them looking opportunistically towards the next strategies for the business," says Elizabeth Hedstrom Henlin, an analyst with Technology Business Research Inc. (TBR) . "My opinion is that this is intended to be another transformational next-step for them," much as Maritz's arrival as CEO was in 2008.

It's possible that VMware is sensing some rumblings coming from the rise of software-defined networking.

Gelsinger "can offer a strong vision for networking virtualization, a critical area ... where emerging startups (e.g., Nicira Networks Inc. , Big Switch Networks ) have grabbed a foothold," writes analyst Brian Marshall of ISI, in a report published Tuesday.

Meanwhile, GigaOm reported early Monday afternoon that VMware reportedly will spin off Cloud Foundry, the platform service that lets users develop applications that work across multiple clouds. The reason for separating Cloud Foundry would be to let users know the service won't be beholden to EMC's storage. It's also rumored that EMC wants to spin off Greenplum, a division that does big-data analytics, the report said.

— Craig Matsumoto, Managing Editor, Light Reading

Pete Baldwin 12/5/2012 | 5:27:44 PM
re: VMware Preps Its Next Act

Well, they held a conference call about all this but didn't answer much. Joe Tucci committed to staying chairman (VMware & EMC) and CEO (EMC) through the end of 2013. Maritz will be working on areas such as big data and cloud applications. 


And they confirmed that some of Gelsinger's charter will involve adapting VMware to a world of software-defined data centers.


Regarding the question of "why now" -- "The time to make these kinds of changes is off a position of strength, when you're performing well and you have customer permission to move into these new markets," Tucci said.


It sounds like the whole plan was initiated with the VMware board by Maritz, although he didn't elaborate much on that.

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