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With income lagging, VMware makes changes in CEO suite

Just weeks before its most important channel conference of the year, VMworld, VMware has revealed an executive switch in the CEO suite: EMC COO and former Intel enterprise hardware executive Pat Gelsinger will take over as VMware’s CEO on Sept. 1, 2012.

At that time, current CEO Paul Maritz will move over to EMC in a new role as technology strategy, where he will work on projects related to big data and a new generation of cloud-based applications.

Both men will hold positions on VMware’s board of directors.

The industry scuttlebutt is that EMC wants to reenergize VMware’s relationships with key data center infrastructure partners as Microsoft makes incursions into the data center virtualization software space. According to Bloomberg, an internal memo also suggests that the switch-up is part of EMC CEO Joe Tucci’s long-term succession plan.

At Intel, Gelsinger was in charge of Intel’s Digital Enterprise Group, which accounts for more than half of that company’s annual revenue. His comments about his new job suggest VWware will seek to strengthen partnerships that underscore its position as a leading component of heterogeneous, hybrid cloud infrastructure solutions. Gelsinger said:

“The next generation of software defined-data centers will be built by combining software with standardized building blocks. VMware is uniquely positioned to be the leader in this endeavor and deliver a whole new level of value to customers and its existing important ecosystem partners.”

The CEO switch came days before the VMware reported its second-quarter 2012 results, which suggest slowing growth for the virtualization software giant. While VMware’s revenue was up to $1.12 billion for the second quarter, a 22 percent growth rate over the prior year, net income slipped to $192 million from $212 million one year ago.

For the year, VMware is calling for revenue of $4.54 billion to $4.64 billion, up anywhere from 20 percent to 23 percent.

Commenting on the results, current CEO Maritz said: “Our products, amplified by the recent acquisitions, including Nicira, are providing the means for our customers to transform IT as we move into the cloud era.”

The proposed $1.05 billion buyout of Nicira will strengthen VMware’s position in software-defined networking (SDN) and network virtualization for open source initiatives.

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