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Making Sense of the Gelsinger Story

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So, is he staying or is he going? That's been the question on the minds of many in the virtualization industry the last few days, following the explosive report by CRN Tuesday night that VMware CEO Pat Gelsinger was leaving the company after the Dell/EMC marriage is completed.

He Said/He Said
The story brought swift and strong denials from the PR arms of both VMware and EMC, VMware's parent company, and from Gelsinger himself, speaking at a tech conference the morning after the story broke. There's a lot to untangle here, from multiple angles, and this surely won't be the end of the story.

The key question to answer: Is the CRN story accurate? Of course, there's no way to know that for sure. Reporter Kevin McLaughlin relies completely on anonymous sources for the details. It's impossible to know from the story how many sources were used, but he does quote a "high-level EMC source" at length.

Axes and Agendas
The problem with using unnamed sources is that we don't know if they really know anything. They could have an axe to grind, or a secret agenda that that reporter doesn't know about. I'm uncomfortable with stories that use nothing but anonymous sources, especially ones that trash a story's subject, as some of these do. Here's some of what the EMC source said about Gelsinger: "Pat is not an easy guy to work with. Pat likes to do what Pat likes," and "The goal of Dell Technologies is to work closer as a team … I don't know if Pat is completely on board with that model." Those could be the words of someone who completely understands the situation; or the words of someone with a personal vendetta against Gelsinger.

However, stories like this are often difficult or impossible to report without heavy reliance on anonymous sources. I'd imagine that was the case here; given the gravity of the topic, these sources probably wouldn't have said anything if they weren't granted anonymity. It puts a reporter in a tough situation, but on the whole, I tend to side with the reporter in this case; it's clear this isn't a one-source story.

Another factor here is that with stories like this, it's very likely a lot of vetting was done before publication. I don't know anything about the reporter or CRN's editing methodology, but traditionally, the bigger the story -- and the more it relies on unnamed sources -- the more careful the reporter and publication are. CRN has a good reputation in the industry, and that has to count for much.

Swift, Strong Denials
On the other hand, the denials from Gelsinger and the PR statements were swift and unequivocal that the story was a fabrication. Here's what Gelsinger said: "I categorically deny it, EMC categorically denies it, and Dell categorically denies it. There's absolutely no merit or substance to the rumor whatsoever." Those denials would be unusual if the story had any truth to it. Typically, if a story is true, the denials will be more "non-denial" denials, giving some wiggle room.

For instance, Gelsinger could have said something like "That was a ridiculous story, and I have no idea where CRN got their information from. Don't believe everything you read on the Internet." Those kinds of statements make alarm bells go off in my head, but the denials in this case are clear and straightforward. Thus, we're left at an impasse. And I can see the logic in either Gelsinger staying, or moving on after the merger is complete.

Pros and Cons of Leaving
Here's the argument for him leaving: Things have changed enough since the Dell acquisition was announced that a parade of high-level VMware executives have already departed. That does indicate some level of unhappiness within the company. Gelsinger may be experiencing the same thing.

And if you were Pat Gelsinger, and looking for an exit strategy, leaving right after the merger would be a natural time to do it. The upheaval that's been happening (including 800 layoffs in the first half of this year) might convince you it's time to seek greener pastures. You've successfully led the transition from Paul Maritz to the next, post-merger CEO, and helped VMware grow to be a $6 billion-plus company.

Here's the argument for staying: This would be the worst time to leave, given the challenges facing the company. There's going to be enough to do simply integrating with Dell; adding a new CEO to that, with a new vision, leadership style, management style and so on, is the last thing VMware needs. Michael Dell can be a persuasive guy, and Gelsinger said that Dell expects him to continue in his role.

Whatever the truth of the CRN story, it's clear that VMware is facing a challenge it never has before: the hypervisor market simply won't sustain it as a company anymore, as it's reached saturation. It's branching out into numerous new directions, some of which (e.g., end-user computing) are looking more promising than others at the moment (e.g., hybrid cloud).

Dell's Decision
Ultimately, the decision may not even be Gelsinger's. Once Dell owns VMware, it may decide to replace him, whether he wants to stay or not. Until then, however, Gelsinger's denials would appear to be the final word on his future.

For now.

Posted by Keith Ward on 05/12/2016 at 10:30 AM


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