VMware’s CEO Pick Surprised Insiders: Why the Choice Makes Sense

While VMware began looking for a new leader to succeed Pat Gelsinger as CEO early this year, some employees and industry watchers expected the company to shake things up by appointing a different type of CEO than the three technologists who had previously led it.

At the time, many insiders feared VMware’s best days were behind it, as the growth of cloud computing has shaken up the enterprise software industry. VMware—best known for creating software that allows one server to do the work of many—has seen its stock fall more than 20% over the past two years. Revenue growth slowed to 9% in the year to January from 14% in its fiscal 2019. VMware has also seen an inordinate number of executive departures over the past 18 months. A former VMware executive said poor integration of acquisitions and uncertainty over what controlling shareholder Dell Technologies planned to do with VMware hurt morale.

Some believed Sanjay Poonen, VMware’s high-profile chief operating officer of customer operations, who often sings the company’s praises in television interviews and on social media, would get the nod. Others expected VMware would pick an executive from outside the company. Instead, VMware opted this week to appoint its other COO, 18-year veteran Raghu Raghuram, whose background is similar to that of his predecessors, co-founder Diane Greene, Paul Maritz and Gelsinger. (Poonen is leaving the company, VMware said.)