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VMware also must contend with open source virtualization software from Citrix(CTXS Quote - Cramer on CTXS - Stock Picks) and Oracle. Citrix relies on XenSource software while Microsoft is developing its own proprietary software.
Peek says VMware has an advantage over its competitors because its hypervisor is not part of an operating system. He said IT managers like the hypervisor's flexibility because it allows virtualization to operate on many different operating platforms. "We believe that Microsoft's coupling of the hypervisor and operating system may actually prove to be a detriment in many use cases," wrote Thill. Cherry questioned Microsoft's decision to release Server 2008 early without completing the release version of the virtualization software. This may lead businesses to delay upgrading to the Vista operating system on desktops before installing the fully virtualized server software, he said. Cherry characterized Microsoft's virtualization strategy as bent on ensuring the dominance of Windows. Data centers run multiple operating systems, and Microsoft plans to use virtualization in Windows servers to isolate and ultimately replace other operating systems running on virtualized servers, he said. Gaining dominance in the virtualization market depends on management tools to run the data center, and Microsoft may find it difficult to achieve that because its traditional strengths have been operating systems and application software. Microsoft tools "tend to be Microsoft-centric," Cherry said. "They're not as good in a mixed mode environment. Microsoft is trailing VMware in this management of the virtualization space."
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