Former HP President Capellas Tapped to Lead Cisco-EMC Cloud Effort

Former Hewlett-Packerd President and Compaq CEO Michael Capellas has been tapped to lead Acadia, the Cisco-EMC joint cloud computing effort.

As CEO of Acadia, Capellas will head Cisco and EMC's Virtual Computing Environment (VCE) coalition, which includes VMware and Intel. Capellas will be charged with building up VCE’s presence in the channel through Acadia, which could prove challenging in light of Capellas’ lackluster reputation with the channel.

Capellas is best known to solution providers as the former CEO of Compaq, a position he held from 1999 to 2002. He most recently served as CEO of First Data Corporation; he departed the company in March and joined a senior advisor at private equity firm Kohlberg Kravis Roberts &Co. (KKR).

Capellas has also served as a member of Cisco’s board of directors since 2006. He will report to Joe Tucci, chairman and CEO of EMC, and Cisco Chairman and CEO John Chambers. In a press statement, Tucci called Capellas the "perfect executive to build added confidence and trust in the power of Cisco, EMC and our partners to help them along the way."

The addition of Capellas to the Acadia and the VCE coalition adds a soap opera twist to the HP versus Cisco battle. As the head of Compaq in 2001, Capellas engineered the sale of the computer maker to HP in what was initially a $25 billion deal. Following the mega-merger, he briefly served as president of HP under Chairman and CEO Carly Fiorina before departing in 2002 to lead a post-bankruptcy WorldCom.

The blockbuster HP-Compaq merger was bitterly contested by HP shareholders and even though the deal was approved, Fiorina was fired in 2005 for her failure to deliver the benefits of the deal. That, of course, led the HP board to appoint Mark Hurd, who has since piloted the company to the position of the world's largest IT company.

During his time as head of Compaq, Capellas was criticized by many solution providers for increasing Compaq’s direct sales push while failing to improve the computer maker’s channel relations. When Capellas took over Compaq in 1999, the Texas-based company was the number PC maker in the world. But a little over two years later, Compaq was gone. When Capellas left HP in 2002, the departure was seen as a positive by many solution providers who felt Capellas never understood the channel. That negative sentiment still exists today.

"I'm not a big fan of Capellas," said one solution provider CEO, who did not want to be identified. "He was CEO of Compaq and sold it and then CEO of MCI and sold that. He has never stayed in one place. How good a CEO can he be?"

Another solution provider CEO, who wished to remain anonymous, questioned whether Capellas' technical knowledge is obsolete given that his last computer industry experience was some eight years ago at HP. "The question is why is EMC-Cisco putting him in that role now?" he asked. "Is it for public perception of the alliance?"

Mark Gonzalez, president of Nth Generation, a San Diego-based solution provider and HP partner, called the move ’intriguing’ and said that Capellas’ knowledge of Compaq and HP may be a plus for Cisco and EMC. ’It’ll be interesting to see how this plays out in the long term,’ he said. ’This is clearly another salvo in the ongoing war between EMC/Cisco/VMware and HP. It was clever of them to pick Capellas, someone who has a good understanding of not only the industry but also the nuts and bolts of how Compaq worked.’

Whatever the logic behind Capellas’ appointment as Acadia’s CEO, the move will be pivotal for Cisco and EMC’s cloud computing aspirations; according to Cisco and EMC, VCE has already secured 45 partners and six system integrators, with some 200 additional partners are in the certification phase. In addition, Capellas will surely play a role in Cisco’s battle with Capellas’ former employer, HP.

"This HP Cisco battle is the heavyweight fight of the decade," said Bob Venero, president and CEO of Future Tech Enterprise in Holbrook, N.Y. "The winner is going to be the solution providers and customers who will have more options, better choice and enhanced value."

Rob Wright and Joseph Kovar contributed to this report.