VMware CEO Paul Maritz: From $600 To Multi-Millionaire

May 14, 2009
Tiecon organizers chose Maritz to kick off the self-proclaimed worlds largest entrepreneurs conference on bold entrepreneurship

Tiecon organizers chose VMware CEO Paul Maritz to kick off the self-proclaimed world's largest entrepreneurs conference

VMware CEO Paul Maritz kicked off Tiecon’s conference in Santa Clara, Calif. as the opening keynote speaker.

Maritz started his speech on entrepreneurship by drawing on his own experience, as a young computer graduate freshly arrived in Silicon Valley – on January 1st, 1981 – from South Africa, with his wife, a 9-months old baby and about $600 in cash!

“I’ve walked the path that many of you had the privilege to walk. The fairy tale and an incredible experience that all of us know of being part of a society that fosters entrepreneurs and has given us such tremendous rewards,” said Maritz.

But before joining Intel and then Microsoft as one of its top executive, Maritz had to go through some mainframe years. The computer landscape in 1981 was very different from what we know today.

“The [mainframe] world was dominated by IBM and the 7 dwarfs (Burroughs, Sperry Rand, Control Data, Honeywell, General Electric, RCA and NCR). I have left South Africa to work in the computer industry and in those days IBM was the Microsoft of these days: it was the uncool place to go in those days! Instead I went to work for Burroughs because they had a very cool instruction set,” recalls Maritz.

Today’s cool places to work in Silicon Valley are Apple (still), Google or Facebook, replacing the likes of H-P, Sun or Yahoo. But with unemployment soaring, does it matter really anymore?

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Intel Itanium Is The Preferred Chip For The “Also-Ran” Server Makers

April 2, 2009

When launching the latest Xeon server chip, Intel conveniently omitted to talk about its “other” server family, the Itanium.

Probably because Itanium has simply not lived up to the expectation Intel – and others – set forth, almost 15 years ago.

Then Itanium was predicted to dominate the server business, and then trickle down to eventually get into desktops and notebooks. And ultimately replace the X86 architecture altogether, recalls chip analyst Nathan Brookwood.

Well, obviously that didn’t happen and never will even if all of the major server suppliers like H-P, Unisys, Hitachi, NEC, Silicon Graphics – but to the exception of Sun and IBM – have adopted Itanium as their mainframe alternative platform.

“Itanium has become the prefered plaftorm for the also rans in the server business,” quipped Brookwood.

Despite its commercial failure, Intel still wants to hang on to Itanium. And that’s because, Itanium is the only server chip in Intel’s arsenal that can actually compete with the reliability and scalability of its rival RISC-processors like Sun’s SPARC or IBM’s POWER. “[Itanium] is delivering to that very high end mission critical market segment,” explained Pat Gelsinger, Intel’s vice president in charge of the server business.

However, to lower development costs, Intel decided to converge the Itanium platform to the Xeon platform (chipset, QPI’s fast interconnect…). “That will happen when the next generation of the Itanium chip, Tukwila, will launch [probably later this year],” adds Brookwood.

The good news for enterprise customers and the server OEMs like H-P, is that Itanium is not going away. The bad news for Intel, is that it will never be a growth opportunity.

Here’s an excerpt of Brookwood’s comments on Itanium:

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Why Intel’s Comparison With Sun SPARC And IBM POWER Is Humorous

March 30, 2009

Xen 5500 (Nehalem) is Intel's new challenge to RISC processors

Time for a quick reality check on Intel’s comparison of the Nehalem server chip – unveiled at a press briefing today – and its RISC-based rivals.

If you believe Intel’s surreal price/performance numbers shown today, you wonder how CIOs today can still keep their jobs and continue buying IBM and Sun RISC-based servers.

  1. Intel Xeon vs. Sun SPARC: 1.7 times the performance for less than half the cost;
  2. Intel Xeon vs. IBM POWER: 2.5 times the performance for 1/10th the cost.

“Enterprises spend 40 percent of their budgets into proprietary environments such as SPARC or POWER RISC-systems. These are expensive, proprietary, evolving more slowly, typically carry higher maintenance costs, software licensing costs, etc [...] Comparing to the IBM POWER environment, its almost humorous,” quipped Pat Gelsinger, senior vice president and general manager of Intel’s Digital Enterprise Group. “It’s time to start a major refresh out of the proprietary world!”

So I asked chip analyst, Nathan Brookwood, for some explanations. What really happens is that enterprises buy large IBM POWER, Sun SPARC and even Itanium servers for their reliability, scalability, the software they run, etc. Things that Intel’s latest Xeon server chip can’t match.

Along with those very large systems, enterprises also buy smaller SPARC/POWER/Itanium servers, to use in their branch offices. But why?

“Because of compatibility. Enterprises are not buying the small RISC-based for their performance, but because they use the same software than their very large RISC-based systems, which simplifies IT management,” explains Brookwood of analyst firm, Insight64.

So as long as Intel Xeon chips are cantoned at the low-end of the server market, RISC-based chipmakers – like IBM or Sun – have little to worry of the Santa Clara, Calif.-company nibbling on their market.

Unless of course, there’s a renewed effort from Intel behind Itanium!

Here’s a short video excerpt of Gelsinger comparing today the latest Intel Xeon server chip with IBM’s and Sun’s:

And here’s Brookwood’s take on Intel’s RISC comparison:

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Dell Blasts Cisco Server Strategy; Drives For More Standardisation

March 26, 2009
Dell's president of the large enterprise division wishes Cisco good luck entering the server market!

Dell's president of the large enterprise division wishes Cisco good luck entering the server market!

Going after the server market, is not going to be a walk in the park for Cisco. And after Brocade, it’s Dell’s turn to take a shot at Cisco’s data center strategy.

In a conversation yesterday with Stephen Schuckenbrock, the president of a Dell unit that serves large businesses – $20 billion in annual revenues – had strong words to describe Cisco’s inroads into the server market.

From a customer perspective, why do we need another proprietary platform in the industry. Customers want open architected solutions. They want the flexibility to choose what optimises costs and output in their own business. Dell provides that.

A lot of our competitors, whichever one you choose, would like to lock you in their proprietary sofware and services stack that goes on top of the platform. That’s not our approach.

And Schuckenbrock to add,

“Cisco is just another one of those proprietary solutions that happens to be a new entrant that will learn a lot about what it means to be in the server industry.

And they are in generation 1, and we are in generation 11. I think we’re prepared for that battle.”

Up to 18 servers consolidated into 1 new Dell server

Schuckenbrock also talked about how Dell’s new servers will be able to help enterprises reduce costs – up to 40 percent – through the use of consolidation and virtualisation.

“With our new enterprise efficiency platform which comes with 20 new products, we’re seeing customers that can consolidate 9 servers to 1. Just consider that one simple example where each of those servers come with software licensing, maintenance agreements, their own amortization and depreciation schedules, take up space and consume power. And when you consider the costs of all of those things, and contrast with the do-all-that in one footprint, the savings will begin to speak for themselves.

Emerson seen consolidation as they’ve added a lot of virtualisation to that same agenda of up to 18 to 1″ consolidation to our new platforms

Here’s a video excerpt of my conversation with Schuckenbrock:

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IBM To Buy Sun?

March 18, 2009

Today, the Wall Street Journal reports that IBM is in talks to buy Sun Microsystems for a mere $6.5 billion in cash, less $1.63 billion the Silicon Valley company has already in the bank.

A chump change for Big Blue which has about $12.7 billion in its cash reserve, but a 100 per cent premium for the Santa Clara, Calif.-company stockholders!

What a reverse of fortune for Sun which also approached H-P. I remember co-founder Scott McNealy telling me last year that before anyone think of acquiring his company they will have to have it least $20 billion. Now, it’s about a quarter of that.

An IBM-Sun combination would become undisputedly the world’s largest server maker with 42 per cent market share, against H-P (29.5 per cent) and Dell (11.6 per cent); as well as a formidable force in the data center arena, open source software and storage.

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Analyst: Cisco To Launch Densest Intel Blade Servers; Competes Head-To-Head With Dell, H-P, IBM, Sun

March 15, 2009

At an event Monday, Cisco Systems CEO, John Chambers, will unveil the company’s first ever servers, code-named “California”.

According to an IMEX Research report, Cisco’s blade servers will feature two Nehalem 5570 Xeons based on Intel’s Core i7 processors, with up to 384GB of memory, well above the maximum capacity of 128GB in today’s blades and allowing up to 100 virtual machines on a single server.

“Cisco will be entering the market with by far the densest and powerful blade servers and data center infrastructure than any existing on the market,” indicates the IMEX report.

The “California” blades will integrate VMware’s virtualization software, and embed a Nexus 5000 networking switch, putting computing and networking in a single box, thus removing bottlenecks at a memory and networking level.

The San Jose, Calif.-company’s latest servers will compete head-to-head with blade offerings from Dell, H-P, IBM and Sun.

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IBM Tops Shrinking Server Sales, But Blades Is Hot Spot

February 25, 2009

(Revenues are in Millions)

Vendor

2008 Revenue

2008 Market Share

2007 Revenue

2007 Market Share

2008/2007 Revenue Growth

1. IBM

$16,988

31.9%

$17,336

31.4%

-2.0%
2. HP

$15,751

29.5%

$16,041

29.1%

-1.8%
3. Dell

$6,199

11.6%

$6,261

11.4%

-1.0%
4. Sun

$5,377

10.1%

$5,868

10.6%

-8.4%
5. Fujitsu/FSC

$2,566

4.8%

$2,676

4.9%

-4.1%
Others

$6,451

12.1%

$6,949

12.6%

-7.2%

All Vendors

$53,332

100.0%

$55,130

100.0%

-3.3%

It will get worse before the server market improves, late this year or early 2010.

According to IDC’s Worldwide Quarterly Server Tracker released today, worldwide server revenue declined 3.3% to $53.3 billion, while worldwide unit shipments grew 2.0% to 8.1 million units, for the full year 2008.

This is the first time the server market exceeded 8 million units in a calendar year, reflecting continued demand for new physical servers even as virtualization makes significant gains in the enterprise, said IDC.

“In the near term, IT customers will increasingly look for IT optimization projects with strong ROI potential and extend virtualization, consolidation, and migration programs in order to lower capital and operational costs while improving efficiencies,” said Matthew Eastwood, group vice president of IDC’s Enterprise Platforms Group in a statement.

Blade servers are hottest products in slowing server market

One bright spot is the market for blade servers – slim computers that slide into a chassis – for which revenues grew 33.3% year over year to $5.4 billion in 2008.

H-P maintained the number 1 spot in the server blade market last quarter with 54.8% revenue share and IBM finished second with 21.7% revenue share. Sun, Dell, and Fujitsu/Fujitsu-Siemens all significantly outperformed the market with year-over-year revenue growth of more than 60% respectively.

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Sun Posts Loss, Predicts Lower Revenues Inspite Software Growth

January 27, 2009

No signs of recovery in sight for Sun Microsystems, one of Silicon Valley’s former bellwether, which swung again to a loss.

For the quarter ending last December, the Santa Clara, Calif.- company posted a loss of $209 million – affected by a $222 million restructuring charge – and declining revenues of $3.22 billion. Sun’s server revenue fell 14 percent, to $1.37 billion. Storage revenue fell 13 percent, to $570 million.

However, Sun’s software business – including Java and open source software – constitutes a bright spot growing 21 percent year over year, now at an approximately $600 million annual run rate based on first and second quarter fiscal 2009 results.

Sun Microsystems ended the last quarter with $1,630 billion in cash and/or equivalents and has a current market capitalization of less than $3 billion. Which could be seen as being undervalued if not for its dismal outlook.

Looking ahead, Sun CFO Mike Lehman expects indeed revenues to decline on the current quarter, a mix of typical seasonal decline and high-end computers purchase delays from large corporations.

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Angry Shareholders Won A Say On Sun’s Executives Pay, Cash Bonuses

November 5, 2008

 

Shareholders will now get a say in Sun's CEO Jonathan Schwartz pay

Shareholders will now get a say in Sun's executives pay

 

I can only think of one CEO in Silicon Valley who actually can get a 44% pay raise (estimated at about $11.1 million) while his company stock plunges more than 60%, and that’s Jonathan “pony tail” Schwartz, the CEO of Sun and a regular blogger.

“We think the [compensation] plan is working. We are all disappointed in the performance of the company but we think our compensation plan reflect pay per performance,” explained Steve Bennett, the chair of Sun’s compensation committee and Intuit’s CEO.

But that’s all but over now.

After stockholders’ revolted over Sun’s compensation “philosophy” today during the company’s annual meeting at its Santa Clara, Calif., headquarters.

The data center focused company will now have to seek shareholders approval before deciding on any executives pay and compensation. Not unlike at Apple where Steve Jobs also just gets $1 in salary. I wonder if that’s the magic number to entice executives to perform. Jonathan?

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