New VMware CEO Pat Gelsinger faces challenges as the company approaches VMworld, which is scheduled for later this month in San Francisco and again in Barcelona, Spain, in October. There are four things VMware should do to help itself regain the initiative in the virtualization market.
The company is currently going through a period of reorganization as the Pivotal piece is spun out and end-user applications are sold off. This retrenchment, along with the arrival of Gelsinger and the departures of key executives such as VP Bogomil Balkansky and CMO Rick Jackson, suggest that some of the changes are roiling the ranks.
VMware has unloaded Zimbra to Telligent for “an undisclosed amount,” but it’s unlikely it got anything like the $ 350 million with which Yahoo originally purchased Zimbra in 2007. Whatever VMware paid Yahoo in 2010, it’s also unlikely that VMware got its purchase price back. Earlier, VMware dispatched SlideRocket to ClearSlide for another undisclosed sum. Both of these acquisitions to me reflected a PC-era belief that a next-generation killer application guaranteed future virtualization customers. Former CEO Paul Maritz’ sense of competition, cultivated at Microsoft, might have gotten the better of his judgment on those two.
In a larger sense, VMware is being forced to roll back its once cherished belief that as a young company, its universe was constantly expanding. It was an unquestioned assumption that having conquered one domain, it was necessary to expand into the next. All software companies go through a redress of this assumption as they run up against unexpected limits, and VMware executives are going through theirs. The fact that Gelsinger is the imposer of these changes can’t make him popular in certain circles of the company.