VMware: Leadership and a Changing Market

Let the announcement of the firing of Diane Green, VMware’s founder and CEO, serve as a warning to all companies large and small; adapt or die. Unfortunately, this is lesson that we have seen before with the likes of Kodak, Xerox, Netscape, AOL, Palm, Inktomi, Motorola, and more. However, VMware’s situation is unique as they may not only topple themselves but potentially could ruin another technology giant in EMC.

Whether you are a leader, follower, innovator, or disrupter, a company’s focus must remain on their customers, vision, and the market at large. Too often companies become enamored with their own technology, success, wealth, analyst reports, articles, speeches, etc. and lose focus, execution, desire, hunger, and more. While the highs are incredible, the lows determine the winners from the one-hit-wonders.

VMware did not pioneer virtualization technology, that honor belongs to IBM, but they were one of the first to recognize and develop it’s application within the x86 world of Intel and AMD. One can only surmise that VMware has poured thousand of development hours to perfect their vaunted hypervisor. The end-result is an enterprise class application that is well designed, stable, and widely deployed.

Energized with their acquisition by EMC, VMware continued perfecting their hypervisor, improving their server and workstation products, and watched their sales soar. Blinded by their success and market dominance, VMware lost sight of the market pulse while EMC hit the jackpot with their IPO spin-off. In the meantime the market began to shift as enterprises realized that the virtualization value proposition of server consolidation actually created new challenges of security, virtual machine sprawl, and management worries. Virtualization had an impact on the consolidation of servers, but overall sever sales and capacity continued to grow.

When the dust had settled, VMware awoke to a host of competitors on multiple fronts including; the hypervisor, management, desktop virtualization, P2V, Policy and Security, Virtual Desktops, and more. From IBM, Citrix, Sun, HP, and BMC to Parallels, Quaramet Qemu, Embotics, Veeam, Scalent, Cassatt, and more, VMware is under attack with no where to hide. To make matters worse, VMware awoke the sleeping giant in Microsoft and must now contend with a competitor with seemingly unlimited money, talent, R&D, and marketing power.

Faced with mounting competition, the rapid commoditization of the hypervisor, downward pricing pressure, and unrealistic expectations of both EMC and Wall Street, someone had to take the fall. To add insult to injury, Diane Green was replaced by ex-Microsoft executive Paul Maritz. The emperor has no clothes, the enemy has entered the building, and it is clear that EMC is firmly in charge of their public subsidiary.

VMware is to virtualization as Xerox is to copiers. Whether they can remain relevant is now in the hands of Mr. Maritz, EMC, and the rest of VMware’s leadership team. Will VMware disappear like Inktomi or Netscape, or will they re-invent themselves like BlueCoat or GE? Will other companies learn from their mistakes? Or, is history doomed to repeat itself?

Power, money, hyper-growth, or a fancy new HQ campus, does not guarantee success. Only innovation, humility, partnerships, people, strategy, vision, and a mindful eye on the market will create a lasting entity. In the end, it all comes down to leadership. The evidence is clear; Buffett, Gates, Coffin, Welch, Walton, Merck, Packard, and more inspired, served, and led their organizations to greatness. Be mindful of history, learn from the mistakes of others, and never be satisfied, innovate, and lead.