VMware sues new Nutanix CEO Ramaswami for breach of contract
The rivalry between VMware and Nutanix spilled into courtroom this week when VMware submitted a lawsuit from Rajiv Ramaswami, months right after he still left VMware to grow to be Nutanix CEO.
VMware on Monday night explained it submitted accommodate in Excellent Court docket of the Point out of California, County of Santa Clara from Ramaswami. VMware did not name Nutanix as a defendant but charged Ramaswami with “product and ongoing breaches of his legal and contractual responsibilities and obligations to VMware.”
Nutanix employed Ramaswami as CEO Dec. nine, right after a a few-thirty day period lookup for a substitute for retiring Nutanix founder Dheeraj Pandey. Pandey assisted create the hyper-converged infrastructure (HCI) pioneer into a $1 billion-plus profits enterprise considering the fact that its 2009 founding, and Nutanix and VMware have put together for most of the HCI software package marketplace. Ramaswami had been VMware COO of products and solutions and cloud providers considering the fact that 2016.
Rajiv Ramaswami
VMware released a statement charging that “Rajiv Ramaswami unsuccessful to honor his fiduciary and contractual obligations to VMware. For at minimum two months in advance of resigning from the enterprise, at the same time he was doing the job with senior leadership to shape VMware’s crucial strategic eyesight and route, Mr. Ramaswami also was secretly assembly with at minimum the CEO, CFO, and apparently the full board of administrators of Nutanix, Inc. to grow to be Nutanix’s Chief Government Officer. He joined Nutanix as its CEO only two times right after leaving VMware.”
VMware included that Ramaswami confirmed weak judgment and his negotiations with Nutanix represented a conflict of fascination that he must have disclosed to VMware.
“VMware expects all employees to honor their commitments to the enterprise, and govt officers must be held to an even greater typical,” VMware included in its statement. “VMware spends billions of pounds on its roadmap and R&D to bring marketplace innovations to our consumers and is dedicated to protecting our model, the technological innovations behind our model, and the worth we bring to our consumers.”
VMware included that it submitted accommodate right after failing to “take care of this subject devoid of litigation” by achieving out to Ramaswami and Nutanix.
VMware did not disclose the target of its lawsuit, but a human being familiar with the subject explained it is trying to get monetary damages. He included that VMware designed requests in communications with Ramaswami and Nutanix right after the choosing was disclosed, but Nutanix claimed those people requests fell outside the house of California law. Nutanix contends that VMware requested Ramaswami restrict his job at CEO and agree to not retain the services of any employees from VMware.
“Nutanix and Ramaswami confident VMware that Mr. Ramaswami agreed with his obligation not to get or misuse private details, and VMware does not contend or else,” Nutanix explained in a statement released Tuesday. “Nevertheless, VMware requested that Mr. Ramaswami agree to restrict the normal effectiveness of his career responsibilities in a method that would equate to an unlawful non-contend covenant, and it requested that Nutanix agree not to retain the services of candidates from VMware in a method that Nutanix believes would be opposite to the federal antitrust legislation.”
Nutanix also accused VMware of trying to deny Ramaswami an opportunity to grow to be a CEO.
“VMware’s lawsuit seeks to make interviewing for a new career wrongful. We see VMware’s misguided motion as a reaction to losing a deeply valued and respected member of its leadership workforce,” it included explained in the statement. “Mr. Ramaswami is very pleased of his tenure at VMware and counts many VMware workforce associates as buddies. It is disappointing to see VMware’s administration sue him just for the reason that he selected to go after an opportunity to grow to be a community enterprise CEO. We feel that VMware’s motion is very little far more than an unfounded endeavor to hurt a competitor and we intend to vigorously defend this subject in courtroom.”
California law is typically favorable to career-changers, and does not typically identify non-contend agreements. The source familiar with the submitting explained Ramaswami would be prohibited from steps these types of as sabotaging VMware, recruiting co-staff while still utilized there, stealing trade secrets and techniques or conducting business with consumers on behalf of Nutanix while still doing the job for VMware. But he explained an worker is not needed to disclose he is trying to get a career with another enterprise.
VMware-Nutanix struggle above HCI marketplace
The partnership between VMware and Nutanix has advanced from a near partnership to a intense rivalry. VMware and its current father or mother enterprise, Dell Systems, assisted Nutanix develop the HCI marketplace. Ahead of VMware created its personal vSAN HCI software package, its sales and guidance teams usually encouraged its consumers get Nutanix HCI systems as a way to control storage in closely virtualized details facilities. Nutanix sales also obtained a jolt right after it struck an OEM offer with Dell in 2014, a go that significantly expanded the startup’s marketplace presence.
Three developments adjusted the VMware-Nutanix partnership. Initial, VMware introduced vSAN in 2014, putting it in direct competitiveness with Nutanix. The same year, Nutanix released its AHV hypervisor that competes with VMware’s ESX. Nutanix makes AHV accessible for totally free with its software package stack, and makes it possible for organizations to migrate from ESX if they want to switch hypervisors.
Then Dell acquired storage large EMC — the majority proprietor of VMware — in 2016. While Dell has continued its OEM offer with Nutanix, its sales of Nutanix software package on Dell servers have dropped. The Dell EMC VxRail HCI process pushed by vSAN is Nutanix’s primary competitor, and Dell pushes that product or service to its consumers above its Nutanix systems.
Nutanix also adjusted its sales method, which is now closer to VMware’s. While it carries on to market its personal branded HCI systems, Nutanix has designed its software package accessible to operate on all x86 servers and has built partnerships with HPE and Lenovo, and courted Cisco resellers.
The CEOs of VMware and Nutanix have taken photographs at the rivals in community. All through his 2019 VMworld keynote, VMware CEO Pat Gelsinger explained his enterprise was pulling absent from Nutanix, devoid of entirely mentioning Nutanix by name.
“We are crushing Nu … I suggest we are profitable in the marketplace,” Gelsinger explained. “We are separating from No. two. We are profitable in the space.”
Pandey countered on a Nutanix earnings phone a couple times afterwards that VMware “sells a good deal of vaporware.”
Pandey also explained he wanted Nutanix to substitute VMWare as the “Switzerland of computing” by working throughout all main components platforms.
Who’s No. 1?
Investigate company IDC’s newest HCI profits tracker confirmed VMware foremost with $821 million (40.two% share) in HCI software package profits for the third quarter of 2020. IDC mentioned Nutanix next with $513 million (25.1%).
Nevertheless, even IDC’s exploration has been caught up in the VMware-Nutanix rivalry. Pandey criticized IDC’s quantities for a long time, calling them “funky accounting” and boasting they did not give Nutanix total credit rating for its software package profits.
Subsequent IDC’s newest HCI launch this thirty day period, Nutanix COO David Sangster posted a weblog on LinkedIn that confirmed IDC crediting Nutanix with 28.4% of the HCI software package marketplace compared to VMware’s 14.5%. Those people figures, which were not in IDC’s launch, included sales of storage providers not included in the foundation HCI profits.
