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Optimism for the Gelsinger era at VMware

VMware wants to transform both how users interact with apps and how developers build next generation apps for the cloud

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The most notable news to come out of the VMworld conference last week was the coronation of Pat Gelsinger as the new CEO of VMware. His tenure officially started over the weekend, on 1 September, to be exact.

For those who don’t know Pat’s career, he gained fame at Intel as the personification of the x86 processor family. It’s unfair to pick a single person as the father of the modern x86 architecture, but if you had to pick just one person, it’s probably Pat. He then grew to become CTO, and eventually ran the Digital Enterprise Group. This group accounted for 55% of Intel’s US$37.586B in revenue according to its 2008 annual report, the last full year of Pat’s tenure. EMC poached him from Intel in 2009, naming him President of the Information Infrastructure Products group.

EMC’s performance since then has been very strong, with a 17.5% YoY revenue increase in its latest annual report. Pat’s group contributed 53.7% of that revenue. While he’s a geek at heart (his early work), he proved without a doubt that he also has the business execution chops (his later work). Both will serve him well at VMware, especially the latter.
I heard a common concern at VMworld that, “Pat is a hardware guy so how can he run a software company?” People with such fears don’t really understand the technology business! Pat’s DNA is just what this company needs! As an old semiconductor engineer myself, I know the secret to cramming a billion “moving parts” into a space the size of your fingernail. It’s more than just shrinking things.

You need to modularise the architecture based on principles of systems engineering. VMware’s future (indeed every tech company’s) requires it to modularise its products and hide the complexity through modular packaging. There are naturally differences between the chip world and the software world, but the principles rooted in systems engineering are identical.

Besides, Intel is very much a software company too. Its fame is in silicon (hardware), but the basis of all software lies in the instruction set of that very silicon (software) and it built a rich portfolio of genuine software products over the years too. The McAfee acquisition was post-Gelsinger, but still indicative of the software side of Intel. Pat even coauthored the definitive Programming the 80386 book! His latest employer, EMC, buries its public disclosure of software within other numbers, but it’s clear that this other “hardware” company also sells a lot of software. Any hardware company is also a software company! It's safe to say, "Pat Gelsinger knows software!"

If one is to take a software company like VMware and rationalise its product offerings, the packaging needs to simplify what the customer sees (i.e., good systems engineering). Under the covers, the complexity may be staggering, but to the outside viewer, it’s simple. Until now, VMware is a pure techie company with its entire identity focused on it's technology.

That message is too complex for the business-oriented customers who will drive VMware's future. The goal is to translate the products - and the company's message and mission - into something that makes business sense, not just technology sense. This is Pat’s big challenge. I know he’s up to it. The complexity in any microprocessor will blow your mind, but we need not worry because people like Pat have hidden that chaos from us. He finds the opportunities to do the same at VMware intoxicating! I do too!

I’m excited to see what Pat does with his new baby. VMware is undeniably one of the cool tech giants, but it’s been under some serious pressure. Much of this pressure is self-inflicted (the VMworld crowd cheered enthusiastically when Pat announced the abolition of the company’s reviled vRAM pricing model). Here are just a few of the huge challenges in front of VMware and how I see Pat can help:

  • Strategic sprawl: VMware has spread itself pretty thin over the past several years. It certainly needs to expand beyond just the hypervisor, but its forays into tangential directions such as application development, collaboration, cloud-this and cloud-that, and now networking are straining its execution. Most of these are good and necessary directions, but the company needs to focus now. The fact that there were no truly significant product announcements at VMworld 2012 is testament to its diluted execution.
  • Pat’s job: It is obvious that Pat needs to focus the company. His statements around heterogeneous support and a need to streamline the company’s role as an infrastructure company will help. I fear this may come at the expense of its application-level focus. I hope he keeps feeding that part of the business because VMware cannot differentiate itself without a strong capability to optimise the application tier. We're excited about the Horizon Suite and Cloud Application Platform momentum here: VMware wants to transform both how users interact with apps and howdevelopers build the next generation of apps for the cloud. This pincer strategy is a strong one.
  • Partner coopetition: In countless ways, VMware is increasingly competing with its major partners (e.g., Cisco, HP and IBM) while also embracing partners that are at odds with its mother EMC (e.g., Dell and NetApp). This ecosystem needs a politically savvy leader to ensure a solid revenue stream from semi-friendly partner relationships.
  • Pat’s job: He brings to the VMware table a lot of existing relationships with the key people (he’s a longtime friend of Michael Dell, for example). As a senior exec at Intel, this was a very important element of the job. The success of his organisation at Intel shows that he can do this well. Granted, the dynamics are not quite the same (this one will be tougher), but he is a seasoned politician, personally mentored from a young age by the legendary Andy Grove.
  • The Illuminati: In my opinion, this is the toughest challenge for VMware (and others like Cisco and Microsoft). Among the 20,000 attendees at VMworld were probably 18,000 or so high priests of the Church of VMware, those who possess the sacred certifications that demonstrate their divinity among the mere techno-geeks. I do love such ├╝bergeeks, but they pose a dilemma for VMware. They are the crowd that fueled VMware to its elite status but the future is a world where they may find themselves less apostolic. The evolution of virtualisation leads to cloud. The evolution of a VMware admin is not a cloud admin. That “cloud admin” term was tossed about liberally at VMworld, but it is as fictitious as a unicorn or the Loch Ness Monster!
  • Pat’s job: For one, he brings geek cred like few other living humans can. When he says, “I am one of you,” it’s a true statement that carries clout. Right there, he has them in a position to transform them. Still, this will be a very delicate and harrowing journey. I honestly don’t know how the Illuminati will receive what Pat and the rest of VMware need to do, but I do know the eventual outcome. The high priests must rewrite their holy scriptures - or even abandon them in whole or in part - to thrive in a new world. Economic forces will ensure that inevitability. Pat needs to bring the crowd along on his journey. As he reinvents VMware, he must convince the masses that this is good for them and how they have a hand in this evolution. In some ways, it doesn’t matter all that much. The power (and the money) that will fuel VMware’s future live higher in the IT organisation. The CIO and other senior leaders are VMware’s customers now. Pat can bridge the chasm between these two constituencies. He can geek out with the hardcore technologist in the morning and join a Fortune 500 CEO for dinner that evening - and be equally comfortable and credible in both situations.

I'm confident in Pat's abilities because I've known him a long time. I first met Pat about 35 years ago, when we were two of the candidates for scholarships to little Lincoln Technical Institute in Allentown, PA, about an hour north of Philadelphia. As fate would have it, he and I won the two full-tuition scholarships that year. That began a friendship through our early education in electrical engineering. There was also some friendly competition between us, where I usually came out as runner-up!

He went on to greatness at Intel and I went into the machinery of Ma Bell. Both of us were fortunate enough to get planted into remarkable intellectual playgrounds rich with opportunity, and our careers flourished.

We kept in touch through the years, but despite numerous attempts, we incredibly didn’t get the opportunity to meet face-to-face again until 30 years later, right after his jump from Intel to EMC!

Let me be clear about one thing. Despite my desire to see my friend succeed, I remain objective about what he and VMware must do and will do. He has a tough job. He’s has very tough jobs before, but this is different. A failure here and there is certain and he still has a lot to learn. We all do! Pardon me if I beam with pride, though. He and I both come from humble roots in rural Pennsylvania. Look what he’s done! I’m proud of my old friend and I can’t wait to see what he does!

One other thing - don’t wait three decades to see old friends!

Posted by Glenn O'Donnell

Thanks to Forrester analysts Dave Bartoletti, Henry Dewing, Stephen Mann, and James Staten for their contributions to this post.

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