VMware Takes Aim at Microsoft

SAN FRANCISCO - With its market dominance under assault, VMware(VMW) came out slugging Monday with a product roadmap intended to put Microsoft(MSFT) on the defensive.

At the company's annual conference in Las Vegas, VMware shifted the conversation away from server operating systems by announcing products for virtualization at the data center level.

The roadmap also calls for products for cloud-computing service providers -- a new but growing business opportunity.

By framing the argument to its own advantage, VMware is giving its sales team a powerful argument in competitive situations.

Tom Bittman, an analyst with Gartner, said the Palo Alto, Calif.-based firm can maintain its two- to three-year technology lead on Microsoft with these initiatives.

Bittman also said the moves bear the stamp of chief executive Paul Maritz, who replaced ousted CEO Diane Greene only two months ago.

Maritz is a former Microsoft executive with an expertise in cloud computing, and his marketing savvy is evident in the positioning of VMware's strengths relative to Microsoft.

VMware's bread and butter had been its virtualization software, which enables IT departments to use servers more efficiently, reducing equipment and energy costs. It expects revenue of $1.9 billion this year, according to Thomson Reuters. Microsoft released its first virtualization product in mid-2008 and will ship others in October.

SinceMicrosoft began to encroach on VMware's server virtualization terrain in 2008, however, VMware's revenue growth projections have dwindled. In early July, the company reported second-quarter top-line growth of 54% year over year, but revised the full-year rate to a range of 42% to 45%, from 50%. That's half the 2007 growth rate of 88%.