Silicon Valley Rocked by Executive Musical Chairs

Posted Jan. 21, 2011, by Larry Walsh, CEO and president of The 2112 Group

Tech giants Juniper Networks, Hewlett-Packard and Google shocked Silicon Valley with announcements of significant leadership changes – many that will trickle down to the channel. Executives playing musical chairs this time of the year isn't new, but the pace and level of the changes is significant. Here's a look at the latest leadership shakeups.

Hewlett-Packard Reshapes Board
Oracle co-president Mark Hurd earlier this week vowed to continue pressing his shareholder civil suit against his former company, Hewlett-Packard, until it releases internal documents related to his forced resignation last summer by the reactionary board of directors. HP isn't waiting for the lawsuits to play out by announcing a massive reshaping of its board of directors yesterday.

Four members who had a hand in Hurd's departure – Joel Hyatt, John Joyce, Robert Ryan and Lucille Salhany – will not seek re-election at the annual shareholders meeting in March. Replacing them are industry veterans former eBay CEO Meg Whitman, former Acatel-Lucent CEO Patricia Russo, AXA Private Equity CEO Dominique Senequier and Booz & Company CEO Gary Reiner.

The shakeup is clearly an attempt to reform the board's image, as many of the departing members were also involved in the previous two board-level scandals of the last five years. Some analysts see the change as a reflection of new CEO Leo Apotheker's asserting authority and reshaping HP for the future. There's probably some truth to the later statement, as the new members bring an international flavor that currently doesn't exist in the boardroom, as well as experience in domains in which HP has desire to expand, such as telecom, networking and applications.

Channelnomic's Perspective: The changes won't have a dramatic direct impact on the channel. The new composition of the board will make it easier for Apotheker to execute his agenda. And what Apotheker designs will trickle down to the field.

Juniper Grabs Execs from Cisco, Microsoft
In what can only be described as a coup, Juniper Networks surprised the channel community yesterday by announcing the appointment of Cisco veteran Luanne Tierney as vice president of global partner marketing. Additionally, Juniper nabbed Microsoft's Windows 7 marketing guru Brad Brooks to serve as vice president of worldwide enterprise marketing and solutions.

Tierney is a real surprise, since she seemed solidly entrenched in the Cisco organization. She's worked at the networking giant for the last 14 years. In recent years, she's developed a persona in which she and Cisco channel's have become virtually synonymous. Over the last several years, she's overseen programs designed to transfer knowledge in marketing and communications to more than 13,000 Cisco partners.

In a statement, Cisco said of Tierney's departure, "We wish Luanne well with her future endeavors. Luanne built a strong partner marketing team and drove innovation, creativity and great programs. Our commitment to partner marketing and our partner marketing strategy remains unchanged."

Juniper's recruitment of Brooks is equally significant, as it is yet another senior Microsoft executive to defect in recent weeks. Brooks oversaw the development and marketing of Windows 7, which has revived the software giant's sagging operating system franchise. At Juniper, Brooks will oversee "vertical and horizontal" marketing initiatives to enterprises. In recent weeks and months, Microsoft has watched either the voluntary or "suggested" departures of senior executives Robert Muglia, Stephen Elop, Robbie Bach and Ray Ozzie.

Channelnomic's Perspective: Juniper has been enjoying tremendous success chipping away at the market leadership of chief rival Cisco. The addition of Tierney and Brooks signals it plans to aggressively target Cisco's core enterprise customer base and expand the capitalization of channel partners to reach small and mid-tier enterprises.

Google Founder Replaced Schmidt
The biggest shock of yesterday's game of musical chairs was Google's surprise announcement that Eric Schmidt was giving up the search giant's CEO post to co-founder Larry Page, effective April 4. Schmidt, who is credited with turning the company into the juggernaut that it's become over the last decade, will remain on board as executive chairman of the board.

No one – and we mean no one – saw this coming. Google isn't clear on the reason behind the change, other than offering up some veiled explanation that it was time to reform the management-by-committee system in which Schmidt, Page and co-founder Sergey Brin operated the company. "Larry and Sergey and I have spent a lot of time talking about how to run everything. We think that this will produce even better success for the corporation," Schmidt said on Thursday's earnings call.

Some analysts speculate the change is attempt to deflect criticism of Schmidt's dismissive comments regarding privacy concerns related to Google Street View and failure in high-profile confrontations with the Chinese government.

That's probably not the case, though. While Schmidt has done a fantastic job building Google from a small search engine into a multibillion global enterprise, the company has essentially failed to build a second act. Google Apps, the online productivity and collaboration software suite, is growing through the channel, but only produces about $350 million in annual revenue, according to some industry estimates. Android is the fastest growing operating system in the market and generates more than $1 million in revenue, but most of that income is essentially related to its core search business. And Microsoft is finally beginning to chip away at Google's search business with Bing.

Channelnomic's Perspective: Google is by no means in danger of collapse or falling prey to competitors. However, it needs a second act beyond search, and it needs to get more aggressive in the development of social networking tools, hosted services and homegrown applications if it hopes to stave off competitors.

News of executive changes at these levels is more often insider baseball than actually impactful on day-to-day channel operations and solution provider businesses. However, the volume and brisk pace of executive changes is most likely a reflection of big tech vendors gearing up for what's anticipated to be a breakout year. Economists are forecasting moderate growth in 2011, which means valuations and revenues will remain under pressure. That's an opportunity for aggressive tech companies to steal share in both partners and customers.