As VMware CEO Pat Gelsinger prepared last month to raise funds for charity by climbing one of the world's highest peaks, he had already been scaling another mountain of sorts in his efforts over the past two years to transform the company.
Like Mount Kilimanjaro, which Gelsinger successfully hiked to help fund the construction of a girls' school in Kenya, the summit he was aiming for was high: reshape the company's public cloud strategy, transition its go-to-market strategy and solidify its relationship with parent company Dell Technologies.
The pieces were already falling into place last August at VMworld 2017, where Gelsinger spent much of his time talking with partners, both in keynotes and private sessions, about how VMware's transformation strategy would set a path for their practices to thrive in the years ahead.
While that event marked the hard launch of a long-debated plan, Gelsinger and other VMware leaders were confident that risky decisions made over the previous two years were about to pay off for the company and its channel.
Wall Street was also starting to catch on, with Palo Alto, Calif.-based VMware's stock having recovered from the losses of previous years.
"We knew the company was on the right track a year ago. It just took awhile for the market to necessarily recognize some of that," Gelsinger told CRN in an exclusive interview.
The goal was within sight: New alliances, products and channel programs started delivering tangible wins in the months that followed, sending VMware's stock to its all-time high near the end of January. These were all signs that Gelsinger and his team had adeptly navigated the disruptive threats to the company's core business from two game-changing technologies -- cloud and containers.
Then the climb got steeper.
At the end of January, word spread through various news reports that Dell was seeking a path back to the public market and might utilize VMware to do it. Suddenly VMware found itself a chess piece in Dell's bid to go public (a game now poised to end later this year when Dell acquires VMware's publicly traded tracking stock.)
Amid the uncertainty about VMware's future as an independent company, Gelsinger and team buckled down and fought to maintain "business as usual" despite the distractions. Those efforts paid off in May when VMware reported 14 percent year-over-year sales growth to $2.01 billion for its first fiscal quarter, ended April 31.
The company also raised guidance for its second fiscal quarter earnings to $1.49 per share, above consensus estimates of $1.34.
VMware channel partners credit Gelsinger not only with the bold decisions that sparked the company's turnaround, but also the steady leadership that stayed the course amid that corporate uncertainty.
BEYOND VCLOUD AIR
Partners peg the start of VMware's transformation to a decision of the sort that's often most difficult for a corporate leader to make -- retreating from an initiative that's already soaked up major capital investment.
But abandoning its public cloud, vCloud Air, and instead enabling infrastructure partners through the VMware Cloud Provider Program, made possible the success VMware has shared of late with its channel, said William Bell, executive vice president of products at PhoenixNAP, a VMwarealigned managed services and cloud operator based in Phoenix.
"Think about the immense bravery that it took to say, 'We're not going to do this. We've invested a ton of money, but instead, we're going to double down with our partners, everyone from Amazon and Google to PhoenixNAP,'" Bell said.
Shuttering vCloud Air tested the CEO's resolve.
"It's always hard to go back," Gelsinger said. The tendency after committing to a project is "sort of burrowing in."
But exiting the public cloud business "made it possible to simultaneously build these big critical partnerships," he said, including with the cloud's largest juggernaut, Amazon Web Services.
"The AWS deal was really the one that captured the attention of the industry," Gelsinger told CRN.
That earth-shifting agreement to build a VMware hybrid cloud service with Amazon Web Services, and other alliances with IBM, Microsoft and Google, were the most striking indicators that VMware was implementing a major strategic shift, VMware partners said.
"You begin down a journey, start down vCloud Air, and it doesn't work. Well, some CEOs would say, 'This has to work,'" said C.R. Howdyshell, president of VMware partner Rolta AdvizeX, based in Cleveland.
But Gelsinger wisely "course-corrected so he can execute on the bigger picture, which is the whole software-defined journey," Howdyshell said, "including server, storage, networking, and now the whole edge."
John Blumenthal, vice president and founder of Santa Clara, Calif.-based CloudPhysics, a VMware cost-optimization software partner, said cutting losses on vCloud Air allowed VMware to start "colonizing the public cloud."
The company leveraged its market strengths to "carve out territory" in AWS and other cloud operators, he said.
Those partnerships, stemming from a recognition of "what wasn't being successful," Gelsinger told CRN, have played "the most-defining role as to where we are today."
By VMworld 2017, VMware Cloud on AWS was ready for a regional launch.
Potential market adoption for that high-profile offering was still a big question mark. But other parts of the business already were accelerating, thanks in part to synergies with Dell Technologies, owner of 82 percent of VMware from its acquisition of EMC, a record-breaking deal that saddled Dell with more than $50 billion in debt.
The AWS service wasn't the only product being pitched to partners at the company's annual conference last August -- VMware had just introduced AppDefense, a novel security service, and was encouraging partners to broaden their virtualization practices with products like the Workspace ONE device management platform, vRealize multi-cloud monitoring and management, and Pulse IoT.
VMware was also preparing a thrust into the container market with PKS, a Kubernetes service built in partnership with Pivotal and Google.
The company saw two other game-changing products, vSAN virtualized storage and NSX virtual networking, as "rocket ships that were going to catapult us into new markets," Gelsinger said.
"It just took awhile for the numbers to get big enough that they really started to drive the financial metrics," he told CRN.