What Does Maritz's Exit Mean for VMware, Its Competitors and the Cloud?

Last week came the news that Paul Maritz will step down from his position as VMware CEO on Sept. 1 to become chief strategist of parent company EMC.

The unexpected management shakeup at VMware leads to the question, "Is VMware succeeding in its effort to reshape its image as a supplier of datacenter virtualization technology to that of a cloud infrastructure and platform provider?"

Here's another one: Was the decision to remove Maritz from the CEO role and install him as chief strategist of EMC a reward for a job well-done or was he kicked upstairs for not moving fast enough?

More important, is the incoming VMware CEO, Pat Gelsinger, who is currently president of EMC's Information Infrastructure and Products unit (effectively its bread and butter storage business), equipped to meet VMware's goal of "moving to the next phase of cloud computing with the software defined data center and solving the problems of the post PC era," as described by EMC Chairman and CEO Joe Tucci in a conference call announcing the shakeup?

Tucci explained the changes by saying, "The time to make these kind of changes is from a position of strength when you are performing well and when you have customer permissions to play in these new markets and customers are giving us permission to play in these new markets."

Forrester VP and principal analyst James Staten isn't buying it. "That's good spin but I read it differently," Staten said. "If all was sunny, they wouldn't be unseating the VMware CEO. Our clients tell us they aren't moving up to vCloud (it and they aren't ready). We don't see evidence of success from VMware on the sales of their management tools and they haven't successfully linked CloudFoundry to the hypervisor forming the cloud OS Paul pitched."

Gartner research VP Chris Wolf agreed. "VMware still has its work cut out," Wolf said. "The cloud is extremely competitive and VMware is up against heavyweights such as Amazon, Google, and Microsoft. VMware needs to do a better job incentivizing providers to make VMware software a mainstay in the cloud."

According to a research note by Pund-IT principal analyst Charles King in wake of the news, VMware has an edge over its key virtualization infrastructure rivals Citrix and Microsoft.

"VMware has stayed ahead of the game by delivering superior management features and services but most industry watchers believe that the next stage of this market will be defined by increasingly sophisticated hardware/software integration," King noted. "If that's the case, it's difficult to think of a better person to lead VMware than Pat Gelsinger. Along with his deep knowledge of the x86 technologies that are core to VMware's solutions [he was Intel's CTO before arriving at EMC], Gelsinger's intimate understanding of how to get the most out of integrated hardware and software should serve him well in his new position."

Gartner's Wolf agreed but with a caveat. "Gelsinger has a proven track record and should do a good job filling Paul's shoes at VMware," he said. "Pat is not afraid to roll up his sleeves and talk tech, and that will win him favor with VMware's product groups. Still, the pressure will be on. Gelsinger is taking over a company where VMware is the dominant market leader. If Microsoft were to erode a significant part of VMware's market share, then the Gelsinger era would likely be perceived as a failure."

Clearly there's some succession planning going on here as well. Tucci said he plans to stay on at least through the end of next year but it remains to be seen what his plans are afterward, but it is believed he is nearing retirement. While many thought Gelsinger was in line to succeed him, Wolf said EMC may be considering Maritz for the top spot. "Paul is one of the top tech visionaries in the industry, and is well-qualified to lead EMC's strategy in emerging areas such as cloud, big data, and next generation application platforms," Wolf said.

Nevertheless, Forrester's Staten has his doubts. It's "not clear [Gelsinger] is the right guy to replace Paul or the guy VMware needs right now but he was next in line," he said. "Nothing in his background suggests he is better equipped. We'll see if he can prove there's more to this than pure succession and EMC tightening the reins on VMware."

Posted by Jeffrey Schwartz on July 26, 2012