VMware COO: Virtualization's Not Over

Despite sending shockwaves through the tech sector with a much weaker-than-expected first-quarter forecast, software maker VMware(VMW ) remains bullish about the long-term prospects for virtualization technology.

VMware, a trailblazer in virtualization, recently issued first-quarter sales guidance of $475 million, below analysts' estimates of $496.5 million. If the company's revenue comes in as expected, it would mark the first ever sequential decline in VMware's sales.

Like VMware, virtualization rival Citrix(CTXS) also expects a year-over-year drop in its first-quarter revenue, underlining the uncertainty clouding technology budgets.

Touted as the solution to users' sprawling server infrastructures, virtualization has been one of the hottest technologies of the last few years. After plenty of hype from firms such as VMware, Citrix, Microsoft(MSFT) and IBM(IBM), however, has virtualization finally had its day?

"We definitely don't think that that's the case," Tod Nielsen, VMware's chief operating officer, told TheStreet.com. "Virtualization is still a strategic priority for CIOs, so I'm not worried that this decline means that the run is over. It's just the fact that this economy is affecting everybody."

Virtualization software, which lets multiple operating systems run in the same computer, has become synonymous with VMware in recent years. Touting its technology as a way for users to streamline their hardware infrastructures, the software company has risen from relative obscurity to more than 130,000 customers in just over a decade.

Despite enjoying strong revenue growth in their recent fourth-quarter results, however, both VMware and Citrix are clearly bracing themselves for bumps in the road ahead.