Greene out at VMware, Big Changes Coming as Virtualization Software is a Commodity

DataCenterKnowledge chose an interesting headline which got my attention.

VMware Surprise: Greene Out as CEO

Virtualization market leader VMware (VMW) announced that President and CEO Diane Greene has departed and been replaced by Paul Maritz, a Microsoft veteran who has most recently been in charge of the cloud computing operation at EMC, VMware's parent company.

VMware's release also said that "revenues for the full year of 2008 will be modestly below" the 50 percent growth seen in 2007. The switch comes as Microsoft is finally bringing its Hyper-V virtualization technology to market, posing the largest competitive threat yet to VMware's leadership in the sector.

Greene co-founded VMware with her husband, Mendel Rosenblum, who serves as chief scientist and is a prominent advocate for the company's technology. VMware watcher Alessandro Perilli of noted that Greene had been a popular CEO. "This replacement, if imposed by the parent company EMC, may have a huge domino effect on the whole VMware management team," Perilli writes.

Shares of VMware are off sharply on the news. In early afternoon, VMW is trading at $39, down $14.36 for a decline of 27 percent.

Potential slow sales are bringing VMware stock down as WSJ reports.

The warning and management change are the latest episodes in the volatile VMware saga, which has seen shares in the virtualization software maker rocket as high as $125 following its $29 initial public offering in August 2007, when it was spun off from EMC, before falling back earlier this year. Shares were recently down 26% to $39.06 on the New York Stock Exchange.

EMC still owns a nearly 85% stake in VMware.

VMWare said Tuesday that 2008 revenue growth "will be modestly below" its prior target of 50%. The mean estimate of analysts surveyed by Thomson Financial was for 51% growth to $2 billion.

The announcements sent shares of VMWare tumbling 26% to $39.30 Tuesday. Shares of EMC were recently trading down 12% at $13.33.

It will be interesting to see what Paul Maritz does taking his experience with Cloud Computing.

EMC’s New Cloud Infrastructure And Services Division

An important aspect of the press release is that Pi’s founder and CEO – Paul Maritz – will be President and GM of this new EMC division.

I’ve been dropping hints like crazy that something was up in this space, but I guess now it’s pretty obvious – we’re taking this shift in the industry very, very seriously.  This ain’t just PowerPoint talking here …

We’re saying that success in this new space will require a very different technology base – and a business model – very unlike other parts of the traditional IT landscape.

The visible parts of this new entity include Pi’s assets, as well as Mozy and the Fortress platform … but I think it’s worth a tour through the rest of the EMC portfolio to see other synergistic aspects.

Paul was one of the best Microsoft VPs I enjoyed working with, and I believe he'll be able to take VMware to a new possibility of cloud computing and virtualization.