I joined VMW engineer in 2009 (I left as soon as the BC merger was announced). At that time we all realized that the public could was going to be huge, but the delicate genius Maritz thought cloud profits would fall when it became commodified so he wanted to focus on the software that was a layer up. Hence the completely reprehensible acquisitions of companies like Zimbra and Sliderocket. I think the die was cast and VMW has spent the last years trying and failing to rectify that horrible blunder.
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Maritz was the symptom, not the cause (which was earlier, when the founders got spooked about Microsoft and sold out for a relatively cheap price to EMC for “coverfire”). EMC/Tucci got tired of dealing with Greene and fired her.
Whatever has the nature to arise also has the nature to pass away.
I think Gelsinger’s plan was to try to position Virtustream and vCloud Air as a fourth cloud hypervisor. When the banks tanked that idea, the die was cast.
Just an opinion from the trenches.
VMware suffered from a perfect storm of having a disruptive product that never reached full potential because it was acquired and subsequently gutted by EMC - a company doing whatever it could to climb out of its own post .com mess.
EMC really should have died after 2000, but was partially saved by 9/11 - most financial companies on Wall Street were saved because their stuff was being replicated on Symmetrix to Jersey City. This gave Joe Tucci enough wiggle room with the board to begin the company’s slow demise - buying up related tech to grow revenue, with no other plan than to sell it off to a holding company like Dell when it got too unwieldy…at one point VMware’s revenue represented 70% of EMC’s value.
So, they did what any tech parasite with little vision other than making money would do…plant Maritz, then Gelsinger in to have them do the same thing with VMware.
And now it is all over. VMware could have taken a different path, but nobody says no to the kind of money the Boston and New York thugs were offering.
Enjoy the spiral to being the next Novell. Joe Tucci thanks you.
The VMware decline story is common across the tech sector. The leadership is helpless as they are unable to organically develop more products that generate new revenue, so they acquire a series of smaller companies and aggregate their revenue instead.
This approach is unsustainable, and eventually, the inept CEO runs out of options to drive growth. Meanwhile, the company now includes a loosely coupled mix of product offerings that aren't integrated into a cohesive whole. Then, they become the acquisition target.
VMware has a strategy now under Hock Man
Lower prices on components but then make bundles that have a higher combined price
Change the pricing from perpetual to subscription to extract ongoing revenue
Offer customers to buy the bundle or get nothing, increasing their spend
Neglect smaller customers who can't afford the bundles leaving them to the competitors
Remove pay-as-you-go pricing making managed services on shared infrastructure uneconomic and lose MSP and Telco partners
Cut costs by firing specialized sales staff and make the generalist do it all
Cut costs by firing partners and then only rehire those that match the business model, losing many that were on-boarded and profitable
Hope that the cost cutting and the hoped for increase in revenue increase margins
Hope that the stock price continues to go up and that the investors are pleased
Wreak your reputation in the process and join Larry Ellison and Oracle in the hall despised vendors
Nope, those seeds were planted when EMC bought VMware. EMC was eventually targeted by Dell with VMware being considered the crown jewel of the acquisition because it's a cash cow. The only reason Dell eventually spun off VMware was because it was getting a load of cash and was planning to sell it off ASAP. Raghu wasn't put in to plan anything except the sale of VMW to another party.
All the strategic moves, acquisitions, etc. are meaningless after the EMC purchase. That's what set VMW down this path.
“ All of Maritz’s acquisitions didn’t burn that much money.”
Agreed, but VMware missed out on a huge opportunity. Maybe the problem predates Maritz, but most of my engineering colleagues thought that VMware should have pivoted to the cloud. They were saying that it was too late by 2009.
As for Pat, his goal was to trick people into thinking VMware was on the rise by buying companies but none of the paid off except for Nicira.
And as for Magoo, well he was always a placeholder.
Magoo’s plan was to walk the earth looking for a new pair of glasses and an unstained shirt.
He is still looking.
All of Maritz’s acquisitions didn’t burn that much money. The core products were never managed effectively, and Maritz deserves the blame for that
How can you make money when you have no idea how much of your software is being used by customers?
No one at VMware seemed to care. Fixing this one thing would easily triple profits.
At least Maritz was a decent human being. Now we have someone who makes Kim Jong Un look like Mr. Charisma.
I disagree. vmware was much smaller and could not expect to compete in the realm of the Big Boys at that time. vmware was not in every fortune 100 company at that time. Maritz's plan was to focus, for the time being, on medium sized businesses. He was strategically purchasing companies to fulfill the goals of providing services to medium-sized businesses.
The plan was a reasonable plan, but even back then, management couldn't make a decision and things fell apart.
Ultimately, as the boss, Maritz is to blame for not making decisions to prod the internal organizations to execute, but his plan was sound.
On the other hand what was Pat's plan?
What was Raghu's plan?