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VMware CEO Diane Greene suddenly replaced

VMware CEO Diane Greene — who is widely credited with driving server virtualization into the mainstream — was suddenly replaced by Microsoft veteran Paul Maritz. Maritz had most recently been running the cloud computing division at VMware parent company EMC.

The industry-shaking announcement came in a statement from the board of directors, but the company didn’t offer any details about why Greene is leaving. VMware chairman Joe Tucci thanked Greene for her contribution and wished her the best.

Greene founded VMware with her husband, Stanford professor Mendel Rosenblum, and a host of other engineers 10 years ago. EMC acquired the company in 2003 and then spun off a portion of it in an IPO just last year. That IPO was considered one of the most successful offerings in recent tech industry history. Since then, however, shares have slumped.

Some in the industry say that Greene may have been pushing EMC to spin off the rest of VMware, prompting her removal. EMC still owns at least 85% of the company. One industry expert said Greene and Tucci had a sour relationship that many predicted would end in her departure.

The announcement of Greene’s departure came just as the company reported that fiscal 2008 revenue would fall below prior guidance, which had called for a 50 percent growth over last year.

Though VMware is considered the mother of virtualization, the company is under extreme competitive pressure, especially now that Microsoft released its virtualization feature — Hyper-V. That’s not to mention pressure from a host of other software players.

Maritz retired from Microsoft in 2000 after 14 years with the company. For part of that time, he was the third top ranking executive behind Bill Gates and Steve Ballmer.

After leaving Microsoft, Maritz founded software company Pi Corp, which was later acquired by EMC.

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