Enterprise

VMware needs to transform faster. A stay-the-course CEO might help.

The incoming CEO of VMware, Raghu Raghuram, has been with the company nearly 18 years. He says he wants to accelerate the company's progress on its current trajectory, not change directions.

VMware
VMware has a new CEO.
Photo: Yichuan Cao/NurPhoto via Getty Images

When Raghu Raghuram first joined VMware, AWS cloud computing didn't exist. For that matter, neither did Microsoft Azure or Google Cloud. There wasn't even TheFacebook.com, just its distasteful predecessor, FaceMash.

VMware announced on Wednesday that Raghuram would serve as the company's next CEO, taking over for Pat Gelsinger, who departed in February to lead Intel. Along with another insider, Sanjay Poonen, Raghuram was widely considered an early favorite to fill the CEO vacancy. Poonen, who ran customer operations, said Wednesday he would leave the company.

Raghuram will officially take the reins as CEO in June. Until then, he will continue to serve as COO of products and cloud services, a job that requires him to oversee all of VMware's product and service offerings, centralized services and support and operational functions. VMware CFO Zane Rowe has been serving as interim CEO and will continue in the CFO role after Raghuram takes over.

Raghuram joined VMware as director of product management in 2003 when the company was still a 5-year-old startup, its biggest technical concern introducing 64-bit support. He had previously served as a director of product management at Netscape and later Bang Networks.

He quickly rose to VP of datacenter and desktop platform products in 2005 and general manager of VMware's cloud infrastructure and management group in 2010.

An engineer by training, he graduated from the Indian Institute of Technology, Bombay. In 1996, he received his MBA from Wharton.

It's clear that Raghuram wasn't hired to shake things up at VMware. "When I started at VMware 18 years ago, we were only a few hundred employees," Raghuram told Protocol. "A key to our success, which we will continue to this day, is to not disrupt for disruption's sake, but rather to build on the needs of our customer."

Along the same lines, Raghuram said in an interview with CRN that he was hired to "make us the leader in multi-cloud computing." He added: "The great news is we're already going down this path, but now we get an opportunity to turbo-charge and accelerate this even further."

With stability front and center, don't expect Raghuram to weigh in on politics or social concerns.

He told Fortune that he had "no intention" of fitting the mold of the CEO who takes frequent public stances on social and political issues; instead, Raghuram said he will be "spending most of my time on what's good for VMware, customers, and associated industry technologies."

One can hardly blame VMware for prioritizing stability. The company has a clear winner in its subscription and SaaS business segment, which experienced 38% annual revenue growth in its most recent fiscal year. Raghuram will likely focus on further growing this business segment while managing the transition away from licensing revenue. VMware brought in just over $3 billion in revenue from licensing in fiscal 2021 — 26% of total revenue, down 5% year-over-year.

"We are putting a lot of emphasis on building our subscription and SaaS business and invest[ing] in our future, while delivering the technologies and solutions today that help our customers and partners with their digital transformations," Raghuram told Protocol.

Finally — and perhaps most pressing on the list of challenges ahead — Raghuram will help VMware define its identity following its final spinoff from Dell. In April, the companies completed the distribution to shareholders of Dell's 81% equity ownership interest in VMware. The move was intended to allow VMware to realize greater potential as an independent company.

Raghuram says full independence will help accelerate VMware's growth. "Over time, you will see an enhanced ability to extend our ecosystem across all cloud vendors and on-premises infrastructure vendors, as our simplified capital structure that will support growth opportunities," Raghuram told Protocol.

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