Maritz Replaces Greene at VMware: Some Implications for the Coming Microsoft Battle

Paul Maritz (VMware's (VMW) new CEO) has a cloud computing background, which makes this recent move ever more interesting for VMware watchers.

While the trade and financial press have been understandably big on his product and marketing contribution to Microsoft (MSFT) across 14 years, I think his role at the EMC (EMC) Cloud division really gave VMware a "two-fer" at a critical time in its history.

It seems very likely that the combination of Hyper-V's entrance and VMware's recently reduced guidance set the stage for a CEO change; yet EMC made an abrupt move that probably caught most of the virtualization industry - including VMware insiders - by surprise. The speed of its replacement suggests that they don't want to give Microsoft any wiggle-room when it comes to the adoption of Hyper-V inside the data center.

Diane Greene made an incredible contribution to VMware. She will always have a high profile following in the virtualization community. Diane was a highly respected executive at VMware, from the rank and file on up through executives. Yet the shipment of Hyper-V represented a threat on multiple fronts, and VMware's legacy of technology excellence in devtest may simply have not been enough to fight Microsoft in the data center.

VMware was genius in devtest on multiple fronts. It even translated that genius into outstanding go-to-market momentum post IPO. Yet Microsoft is no Xen/Citrix and the market is moving from devtest to the more demanding (and even more lucrative) data center. VMware needs to move aggressively into the data center from its virtualization-lite beach head.

Microsoft has a well-earned reputation for destroying even the most brilliant competitors, and the Hyper-V launch ahead of schedule no doubt has already placed additional pressures on VMware. As I mentioned before, virtualization is strategic to Microsoft's coming battle in the clouds with Google (GOOG). If it can encroach on VMware's young foothold in the data center it will make its position in cloud computing even more lucrative, and give it multiple fronts to pressure Google.

Thus far it appears that Microsoft sees virtualization as an extension of its server line, and has priced Hyper-V aggressively for fast adoption in the small-medium business [SMB] space. That is a classic flank maneuver.

Many technology companies have become successful by launching into the traditionally accessible and underserved SMB market, only to build a formidable presence (and product and market momentum) eventually capable of landing larger enterprise deals up against even the most established competitors.

Microsoft could be very successful without having to match VMware's features and formidable partner ecosystem by racing into the SMB market with an established brand and perhaps unmatched prospect intelligence thanks to its role in the existing software industry. If that went well it would have an even more potent position from which to attack.

VMware today thusly faces unprecedented marketing challenges. Its technology leadership and savvy may not be enough to beat Microsoft. And the spoils of victory in virtualization are simply too strategic to Microsoft and others to assume that the coming high stakes battle will be easy. Chances are that it will be grueling for VMware when the time comes for Hyper-V to move up market.

That's why I think Maritz was an especially strong candidate to replace Green. He knows Microsoft well and he knows where the market is ultimately going (into the clouds). He may be able to help groom a technology leader into a marketing powerhouse at a critical time in its history.

His biggest initial challenges may indeed be internal, where he will be filling some big shoes that no doubt enjoyed tremendous internal and external respect. Thusly, he has his work cut out for him internally and externally.

VMware has also built a formidable channel and partner ecosystem that has served it well in its move from devtest to data center. Another key test for Maritz will be how well he handles the balance between critical data center deployment requirements, the channel and partners with potentially mixed agendas or loyalties. The faster that VMware can virtualize the data center (while Microsoft focuses on SMB) the better.

Disclosure: None.

Comments

[User 224347]

VMWare's strength was *not* in devtest, it was in the datacenter. I think this guy is misinformed.

[GNESS]

Virtualization started in devtest and has spread into production data centers. The rate and nature of that spread is a fair debate and a great question to ask during analyst calls. I think it makes all the difference.