The Queen of Virtualization Steps Down

A Royal blunder or a smart move?

July 16, 2008

3 Min Read
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1:40 PM -- For years, we watched as Diane Greene developed and delivered a new paradigm in server virtualization. The industry watched as she built a darling of a startup and wrapped her personality around the technology and the company culture. VMware employees have been loyal and we believe attrition rates have been low over the past 10 years.

The investment in VMware by EMC a few years ago brought little change to the culture of VMware, and it enabled the vendor to continue delivering its market-making technology. One other thing the EMC investment did was move the company from startup darling to new heights as a corporation. VMwares startup days were quickly behind it.

After the IPO in 2007, Diane Greene and the VMware board of directors agreed to extend Diane’s employment contract by one year (one point is clear now, Diane was under employment contract subsequent to the EMC investment leading to IPO). Is it a surprise that Diane’s contract was not renewed? Not when one looks with hindsight and with some degree of foresight to what VMware can expect within the market it created.

Now that the freshly minted IPO shine is off the VMware apple, we see competitors working hard and taking small bites of market share while building mindshare with value added resellers (VARs) and end users.

I believe that EMC’s decision not to renew Diane Greene’s contract was an action taken with competitive foresight in mind.EMC clearly recognized the value of Diane’s contribution in building VMware with their investment in the company and requested that Diane stay on after the IPO. Alas, when a company creates a market and competitors enter behind them, it's time to get a little tougher and start responding to the competitive threat. I believe EMC’s selection of Paul Maritz is wise, as Paul has sharp competitive skills honed at Microsoft. If my memory serves me correctly, Paul was in a competitive leadership position as Microsoft thwarted the threat from Netscape.

Paul’s short time within EMC (four months) may have given him enough experience to pick up the famous EMC competitive DNA. Time and VMware’s ability to compete successfully against the onslaught of Citrix’s XenSource and Microsoft, with its Hyper-V product, will prove his prowess.

The time for heavy marketing and competitive output from VMware is here. In addition, it is now time for VMware to innovate and leapfrog their competition. They are no longer alone.

The Trainer Test results: Timing is everything in our industry. VMware’s board of directors has made a smart move by appointing Paul Maritz, and I believe we will see Diane again creating a new market with new innovations.

— Tom Trainer is founder and president of analyst firm Analytico. Prior to founding Analytico, Trainer was managing senior partner at Evaluator Group, and has also worked at EMC, HDS, Auspex, and Memorex-Telex during his 30-year career in IT.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • Citrix Systems Inc. (Nasdaq: CTXS)

  • EMC Corp. (NYSE: EMC)

  • Microsoft Corp. (Nasdaq: MSFT)

  • VMware Inc.

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