Diane Greene Out as VMware Chief

Paul Maritz, a Microsoft veteran who left that company in 2000, takes over Greene's role as captain of the ship, becoming the new president and CEO. Maritz founded another company, Pi Corporation, focused on cloud-based computing, that was bought by VMware's parent company, EMC, last February. Talk about a quick promotion.

This is stunning, totally out-of-the-blue news. I have no idea why this happened; there were no hints that I saw anywhere that Greene was in trouble. After all, VMware continues to perform very strongly in the market. Sure, there were some choppy waves; for example, Microsoft's Hyper-V was just released and threatens VMware's pricing structure, among other challenges. But given VMware's position as the dominant force in this space, the company is poised to answer those kinds of challenges.

Often, when a top-level executive is in trouble, there are warning signs that build up over months or even years: the company is under-performing, there's chaos in upper management with executives abandoning ship right and left, whispers of takeovers float around the company. Nothing of that nature was happening, as far as I'm aware, with VMware. The company's direction is clear, and it continues to unveil new products and move forward.

It's hard to imagine a more brief recognition of the gigantic role Greene played in shepherding VMware through its growing years into the virtualization Goliath it is today. From the press release:

"As one of the founders and the leader of VMware, Diane guided the creation and development of a company that is changing the way that people think about computing. The Board thanks her for her considerable contributions to VMware and wishes her every success in the future," stated Joe Tucci, Chairman of VMware's Board of Directors.

That's it. That's it? For Diane Greene? It makes one wonder what's going on at EMC. Since a successor was already named, this was obviously in the works for quite awhile. After that brief mention, the rest of the release is about how qualified Maritz is. Then, at the end of the release is an ominous note about how VMware expects profits for 2008 to fall below the 50 percent growth rate of 2007's performance.

Is that what this is all about? VMware isn't performing as spectacularly as it had in the previous year? If so, that would be a remarkably short-sighted reason to can Greene.

It should be a very interesting earnings call on July 22, when Maritz will talk with journalists and analysts for the first time as president of VMware. I wouldn't be surprised if he announces price cuts across the board for VMware products, as that is the chief complaint about VMware.

In any event, Diane Greene is out. Paul Maritz is in. Where does VMware go from here? In all, it's another seismic shift of the virtualization landscape.

Posted by Keith Ward on 07/08/2008 at 12:48 PM