VMware Executives Departing Ahead Of Dell Merger

Dell, EMC Deal: 10 Things IT Needs To Know

VMware president and chief operating officer Carl Eschenbach, who once rallied the troops in VMware's ecosystem by urging them to beat out "a bookseller" when it comes to providing cloud services, is leaving the company.

Eschenbach is joining the venture capital firm Sequoia Capital, according to a March 1 story in Fortune. VMware announced his departure "to pursue other opportunities" without naming where Eschenbach planned to go.

Eschenbach has been with VMware since June 2002, and according to his corporate biography, he "helped grow the company from $31 million to over $6 billion in revenues and from 200 people to more than 18,000." His departure will come as a something of a shock to the third-party partners and systems integrators whom Eschenbach regularly met with and addressed at VMware's annual partner conference.

In addition, Eschenbach was responsible for the VMware's "global, go-to-market strategy, including sales, pre- and post-sales engineering, channels and alliances, marketing and support services." He held several sales positions at VMware before becoming president and COO. He joined VMware from Inktomi, where he was vice president of sales for North America.

He was also the cheerleader who, at the 2013 partner conference in Las Vegas, outlined the challenge posed by Amazon Web Services and said: "I find it really hard to believe that we cannot collectively beat a company that sells books."

Eschenbach's departure follows by one week the exit of Martin Casado, senior vice president and general manager of the firm's Networking and Security business unit.

Casado joined the company in 2012 with its $1.05 billion acquisition of Nicira, a virtual networking firm the he cofounded, where he served as CTO. Casado helped move VMware into the then alien field of network management, adding virtual networking to the virtual server and virtual storage management that were already VMware’s strong suit. Casado, the OpenFlow research authority behind VMware’s NSX virtual networking, left to join the venture capital firm of Andreessen Horowitz. He was a VMware Fellow, as well as senior VP.

Other Departures

Eschenbach's and Casado's departures followed by a month the resignation of chief financial officer Jonathan Chadwick, who left to "expand his advisory roles, working with a number of companies as a non-executive board member," according to the VMware announcement that was part of its fourth quarter earnings report.

The departures are part of a shakeup designed to prepare VMware for its merger with Dell, which is in the process of acquiring EMC, VMware, and Pivotal Software for $67 billion. VMware announced the layoff of 800 employees during its fourth quarter earnings call Jan. 26.

Chadwick left in January, for example, to be replaced by EMC CFO Zane Rowe. Chadwick had been co-COO with Eschenbach, as well as CFO. Rowe did not take on any COO duties.

Eschenbach will be replaced by Maurizio Carli, who had been recently moved into executive vice president of worldwide sales from heading VMware's Americas field organization. "We're thrilled to have Carl join our team. He's one of the best go-to-market and business leaders in the world," Jim Goetz, a partner at Sequoia, told Fortune in an email.

Casado will be replaced by Rajiv Ramaswami, former head of chipmaker Broadcom's infrastructure and networking group and, before that, general manager of Cisco's cloud services and switching technology group. Ramaswami's appointment was announced at the same time as Casado's departure.

In other moves, Ray O'Farrell, in his post as new VMware CTO for six months, will become responsible for VMware's global services and customer advocacy, giving the CTO post authority over the customer's entire product experience.

Sanjay Poonen, head of VMware end-user computing operations, has also been named head of marketing and communications operations.

Despite the high-level departures, VMware continues to grow its revenues and reported a 9% gain in revenues in 2015 over the previous year. Revenues came to a total of $6.57 billion. Operating income was $1.2 billion, an increase of 17% over 2014, according to generally accepted accounting principles.

EMC CEO Joe Tucci, 80% owner of VMware, attempted to combat some of the uncertainty that accompanies investors' view of the company as the Dell merger slowly takes place. "We have a binding, solid merger in place," he said during the Jan. 26 earnings call.

But doubts about VMware's core business continue to dog it.

For example, Pacific Crest equities analyst Rob Owens said after the earnings call: "Emerging businesses showed some bright spots, but the core compute business remains a large portion of the revenue mix, which sets up 2016 for declines in growth. Investor concerns also are likely to persist over the Dell acquisition and the issuance of a tracking stock. We wait for signs of stabilization before becoming more constructive on shares."

[Want to see how VMware keeps expanding its product line? Read VMware vRealize Suite 7 Enhances Data Center Management.]

Even VMware CEO Pat Gelsinger, in an interview with InformationWeek at Mobile World in Barcelona, conceded: "It's somewhat turbulent during the deal process."

The net result is that change is in the air at VMware, and will likely to continue to be through 2016. More executives will leave, some new ones will arrive, and everyone will wonder what happens next until the Dell acquisition is completed.

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