VMware Surprise: Greene Out as CEO

Virtualization market leader VMware (VMW) announced that President and CEO Diane Greene has departed and been replaced by Paul Maritz, a Microsoft veteran who has most recently been in charge of the cloud computing operation at EMC, VMware's parent company.

VMware's release also said that "revenues for the full year of 2008 will be modestly below" the 50 percent growth seen in 2007. The switch comes as Microsoft is finally bringing its Hyper-V virtualization technology to market, posing the largest competitive threat yet to VMware's leadership in the sector.

Greene co-founded VMware with her husband, Mendel Rosenblum, who serves as chief scientist and is a prominent advocate for the company's technology. VMware watcher Alessandro Perilli of Virtualization.info noted that Greene had been a popular CEO. "This replacement, if imposed by the parent company EMC, may have a huge domino effect on the whole VMware management team," Perilli writes.

Shares of VMware are off sharply on the news. In early afternoon, VMW is trading at $39, down $14.36 for a decline of 27 percent.

"As one of the founders and the leader of VMware, Diane guided the creation and development of a company that is changing the way that people think about computing," said Tucci, Chairman of VMware's Board of Directors. "The Board thanks her for her considerable contributions to VMware and wishes her every success in the future."

"VMware is in a tremendous position to extend its lead in the virtualization market," Tucci added. "VMware's Board of Directors is very pleased to be able to appoint an executive with Paul's experience and track record to lead VMware to its next stage of growth and development. Paul is a leader in the software industry. He has decades of experience building one of the greatest franchises in software history, Windows. Paul was instrumental as part of the core executive leadership team in building much of Microsoft's success."

See reaction around the blogosphere from Tech Trader, Silicon Alley Insider and GigaOm.