Industry Analysts Got It Wrong on VMware CEO Transition From Paul Maritz to Pat Gelsinger

I’ve been covering and watching the (mostly negative) commentary over the last couple of days about the change in leadership at VMware from other blogs and specifically the analyst sector.  I really have to wonder, who are these so called experts? Do they even understand the markets and companies that they report on?

SiliconANGLE’s team has been covering the enterprise for decades and has had a front seat view to VMware with respect to the legacy companies as well as the startups.  It’s clear to me that VMware has a focused plan to extend beyond just virtualization and it’s about being a supplier of technology solutions to power applications.

Let me break down my views on VMware and Pat Gelsinger.

Since VMware announced that Paul Maritz would be succeeded by EMC’s COO Pat Gelsinger as CEO, the market has moaned that VMware is practically on the precipice of failure, that Microsoft is eating away at their hypervisor market share because Maritz allowed it to happen, that Gelsinger was given this role because he was passed over to replace Tucci at EMC and will be inadequate because he failed to react quickly to multicore adoption while at Intel. According to many of the experts, the best VMware can hope for is to distance themselves from EMC so that the faithful followers can return.

Really?

Do these analyst have ANY concept about how far VMware has come over the last five years and how well placed EMC is for the next five years.  Paul Maritz was a senior Microsoft veteran when he joined VMware in 2008 and took the company from selling the best hypervisor in town to reorienting around creating a foundation for the next generation datacenter.

IT Transformation was Maritz’s vision and he took the company out of its start-up, drinking from the fire-hose mentality to the company that was going to change the face of IT.  He was not shy about espousing a Microsoft-free world. And just in case the analysts are listening, he wasn’t talking about crushing Hyper-V (who cares), he was talking about replacing legacy applications and platforms.  And so, after more than 20 acquisitions in 4 years, the company has set out on its journey to build an entirely new IT market and platform, where applications are built specifically for scale, where massive data-sets will be aggregated and analyzed in real time, where on-premise or off-premise datacenters are an option and where the conversation shifts from IT consolidation to business growth.  Springsource and Zimbra were the first acquisitions that made me sit up and take notice that VMware was taking no prisoners and that the established software companies better pay attention.

With these acquisitions, Martiz went straight to the developer community and basically said, there is a different way. Far from opening the door to Microsoft, he put them on the defensive.  Microsoft has spent billions to carve out less than 20% market share in virtualization. And they continue to do it because they know better than any other company the power of volume in software licensing. Microsoft is today the Linux of the virtualization market and is wise to keep investing there.

Believe me; Maritz wasn’t pushed out the door and Pat Gelsinger he was not passed over for CEO job at EMC.  So to say that Gelsinger is marrying the ugly step sister because he wasn’t wanted by Cinderella is complete nonsense.  I’d say that he actually has the best job at EMC.  VMware is 60%+ of EMCs market cap, its where all the change and innovation will take place at the company.  EMC is the infrastructure play and VMware is the application play.  VMware an application focused company is where Pat Gelsinger will shine.  New apps, new platforms, new management paradigms, new partnerships & alliances this is the dream job for any serious IT executive and Pat Gelsinger will be in product heaven over there.

The next 5 years will mean navigating substantial change around converged infrastructure and big data (our top coverage areas at SiliconANGLE.com, theCUBE, and Wikbon.org).  Let’s face it, VMware is already the default platform for the datacenter, it’s theirs to build upon.  And if EMC plays their cards right, they can operationalize their server and storage business to support both legacy scale-up datacenters as well as the emerging scale-out datacenter.  If they build a best-in-class services team behind it, they control how quickly they have to eat their own dog food.

VMware basically can’t lose. They will be playing both sides of the fence in a market where storage doubles every two years. This doesn’t take creativity or innovation, it takes rock solid execution.  Gelsinger has the experience to build new.  He lived this type of sea-change once before, he knows what’s coming.  If I were him, far from running away from the mother ship, I’d build a business as quickly as possible that aligned all the software, hardware and services teams together from both a strategy and product standpoint. I’d reward cross-selling between EMC and VMware sales reps and I’d set my company up to make customer adoption seamless. Like IBM and Microsoft do. I’d also do this with all of EMC’s competitors.

Analyst got it wrong mainly because they were looking in the wrong places for where the market is going.

Interested in hearing Pat Gelsinger’s views on tech then follow this link to a post that I wrote called “The Best of Pat Gelsinger”.

http://siliconangle.com/blog/2012/07/20/the-best-of-pat-gelsinger-vmwares-new-ceo-speaks-on-just-about-everything/

John Furrier

John Furrier is founder, co-CEO, and Editor-in-Chief of SiliconANGLE, a new media company covering the intersection of computer science and social science. Furrier is also the co-founder and CEO of CrowdChat a social media platform for large-scale group conversations over hashtags. In addition to SiliconANGLE John runs Broadband Developments a private incubator and investment firm for creating new startups. Furrier lives in Palo Alto, California with his wife and four children.

36 Comments

  1. Furrier-you nailed it. Again.

  2. @clintonskitson Yep, nailed it.

  3. John,
     
    I agree with almost everything you have written here.
     
    A few corrections though.
     
    Pat G. was actually being groomed for the CEO position at Intel too. You are correct, he miscalculated the Single Core v. Multiple core approach. I still have a White Paper he wrote that was title, “Intel Platform 2015, 30 ghz Single Core”. Soon thereafter the Sony Laptop with an Intel 4.0ghz caught fire. Pat G. silently left intel (in my opinion) and landed over at EMC.
     
    Justin Rattner than published a new White Paper titled, “Intel Platform 2015, The Multiple Core Era”. Rattner becomes CTO at Intel.
     
    One quick comment about Pat G. is that I find him to be a Lab Rat, more CTO material and not the CEO lead guy. That could be the mistake being made here.
     
    The VMware story you covered already. But what’s missing is why there is even trouble (there is a lot of pressure from Microsoft) is because Virtualization technology is really expensive. No way around it, it hogs the resources of the machine, especially RAM. Even the consolidation over-all footprint reduction numbers are being challenged.
     
    At first it may consolidate, (it did), but than to really run apps, epescially Mission Critical apps, it gets real costly. 
     
    The recent pricing change spoke volumes to the problem Virtualization will have moving forward. We are talking VMware’s pricing changes. Virtualization hogs RAM, for simple applications 512 MB’s of RAM are required to parition 1 single VM, for more intense apps 1 VM requires 2GB, for Mission Critical APPS it can run as high a 7-9 GB’s. 
     
    If you don’t properly assign RAM to each VM taking in consideration the intensity of the application, something called “Virtual Thrashing” of the disk can take place, and it can bring down the whole system to a screeching halt. 
     
    VMware decides to change it’s pricing, instead of charging a per core price, they now have switched to charging for RAM use. Virtualization doesn’t optimize RAM well, so charge for it. INTEL seems to be putting out more cores per die, the old model doesn’t work will for VMware anymore, so switch the model to our favor.
     
    It’s hypocritical to charge A LOT for something you can’t utilize and optimize well.  
     
    VMware has created the ROAD MAP for the future of Data Centers. Everthing Pat G. discusses is correct, and will happen. But Virtualization Technology will not be the technology solution that takes us into the future. Parallel Processing performance will power us into the future.
     
    IT and CIO’s will not continue to pay big bucks for technology that hogs resources, the next billing cycles for VMware will shock CIO’s.  Parallel Processing will bring performance and cost savings, that’s the future. Who deilvers that is still to be determined.
     
    Disclaimer: I have been working in this area for 12 years, specifically this era involving Parallel Processing software, multiple apps, multiple users and from the single core era to the multiple core era.
     

  4. @clintonskitson step 1. Undermine credibility step 2. Buzzwords and product names. Step 3. Tout direction step 4. Claim victory in market

  5. @theronconrey So you really think that VMware is on the precipice of failure? FUD.

  6. @theronconrey loaded with indisputed facts and history

  7. @theronconrey yeah, there are a ton of buzzwords in that article. :P

  8. @jakerobinson @clintonskitson Jake add this to the list of “over pints” convos lol

  9. @jakerobinson again. Right direction. But ms is Linux of virt? Wtf does that even mean?!

  10. @jakerobinson already won in the datacenter? Really?! There’s nothing else “winning”?

  11. @clintonskitson yes there is. And loaded with silliness as well that takes away from meat and reads like marketing.

  12. @theronconrey Here’s what I read in the article: “VMware is so far ahead in where the market is going, no one will catch up.”

  13. @theronconrey VMware is way past thinking about infrastructure at this point.

  14. @theronconrey I’ll save the rest for conversation over IPAs. :D

  15. RT @jakerobinson @theronconrey I’ll save the rest for conversation over IPAs. :D < sorry, did I hear you call? :)

  16. @stevie_chambers You do realize the number 1 IPA in the world is only an hour north of SF, right? ;)

  17. @stevie_chambers You’re coming to #VMworld US, yes? :D

  18. @jakerobinson that’s the plan! Are you talking of Rogue?

  19. @stevie_chambers Russian River Brewery!

  20. @theronconrey @clintonskitson this is not spin..spin for what.. just my analysis of the facts of what’s happening in the market..

  21. @furrier I thought it was a good summary for context of whats happened, good job

  22. @clintonskitson vmware has got risk but they are not the old vmware anymore…vmware has to change in the direction away from hypervisor

  23. @furrier what facts? What does “Microsoft is today the Linux of the virtualization market” mean?

  24. @furrier if the market is going to “is everyone is running vmware or MS” and it was binary, I’d agree.

  25. @furrier the “omg the sky is falling crowd” is wrong with a binary response. Yours is the opposite. The market is more nuanced than 1 or 0.

  26. @stevie_chambers @jakerobinson would be awesome with you at the bar too :D we need a hop signal.

  27. @theronconrey i’m just telling what i see in being up close… I agree on the binary issues..market is dynamic for sure.but vmware is poised

  28. @furrier @clintonskitson maybe spin wasn’t accurate… Should have said “a glowing, polar opposite response”

  29. @theronconrey @clintonskitson ok that’s a fair response i guess except my analysis is the best and more plausible of anything on the net

  30. @merv thx Merv ..its what is happening and it’s vmware’s to lose at this point in the enterprise..long cry from 2007

  31. @furrier I’m shocked that you believe your analysis is the most accurate ;) Thanks for the response, maybe I’m not as close so I see it dif

  32. @theronconrey of course i believe I wrote it..seriously we’ve been watching vmware since their founding..

  33. @furrier there’s more too, including an increasdingly cross-portfolio vision that’s been in long gestation. guard is changing in industry.

  34. @merv well said on the gestation comment so right on.. the consumerization of IT is actually going to happen :-)

  35. @furrier @merv No mention of Paul’s new role. How does that fit into the equation?

  36. @billhodak @merv excellent question I have info that I’m confirming re: Paul’s new role..

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