Peter Christy

The Changing of the Guard

Although it's fun to pretend that this is all technology and clever ideas we're regularly reminded of the human element, never more so than with the abrupt departure of Diane Greene from VMware last week. The calmer of our informants point out that in the end this is probably good for VMware since Paul Maritz is an experienced large-company software executive and one who knows Microsoft particularly well. That truth not withstanding if VMware wanted to wish Microsoft well on the availability of Hyper-V (formally released 26 June) it's hard to imagine what they could have done better than the self inflicted chaos from last week. VMware is clearly the incumbent in virtualization and on balance had done most things right. Nothing like replacing the founder and CEO with an outsider, and the resulting $5B stock market haircut that created speculation on what might be wrong internally. VMware certainly has real business challenges with Microsoft's entry starting with the disruptive $28 price of Hyper-V. In the same sense that Intel regularly sucks all the oxygen out of AMD's lungs with affordable (for Intel) disruptive pricing, Microsoft has the same opportunity with VMware and if VMware isn't worried about it, they should be. Although VMware has a real lead in terms of technical and feature parity there are a lot of virtualization cases where $28 and an enterprise license agreement with Microsoft may trump. But as we said, facts and reality notwithstanding, VMware has certainly armed the Microsoft sales force with a basketful of lines to start a productive discussion with a VMware customer. It will be sad if in the end what is almost certainly a very human squabble ends up being a material part of how the market sorts out (but it certainly won't be the first time). A tip of the hat to Diane Green -- she may have reached the end of her big company rope but she should certainly be proud of her part in building VMware to what it is today (or what it was two weeks ago I guess).

Stock Option Roulette

Here in the Valley stock options play an important role in engineers deciding where to work (and for good reason). When a stock is happily climbing up and to the right you have a little screen widget that tells you how much your un-exercisable options would be worth and you contemplate how you will spend the wealth. When the stock turns south everything gets more complex. VMware went public at $28 but first traded in the $50's and then over 2 ½ months more than doubled, a very healthy CAGR by any perspective. Since then the stock has generally retreated and what with the turmoil is under $40, meaning that any FMV (Fair Market Value) option since the IPO is under water. VMware has proposed remedying this by permitting US-based, non executive employees to trade in their under water options for new options with a grant price of the FMV the day after trade in. The hooker is that vesting restarts so you can potentially lose 9 months of the process. What to do? Is the worst over and it's now up and to the right again? Decisions, decisions!

Reality Check for Politicians (and maybe marketers)

The New York Times has introduced a way of annotating political speeches with related information. A great example is what they have done with Al Gore's recent speech challenging the US to break our carbon energy dependence in the next 10 years (more >> ). What's particularly attractive is that it isn't just counter claims -- it's an intelligent annotation of additional rational information that helps the reader decide themselves what makes sense and what is so much hot air. It is probably ambition beyond our humble capabilities, but don't you wish there was an equivalent site that annotated high-tech marketing claims with more of the "facts?"