I don't think their hold is nearly as effective as Microsoft's once was. The hypervisor API is very simple compared to the OS and lock-in is practically nonexistent. It's also not nearly as common - how many machines are running hypervisors these days?
Actually, VMware is more like Palm - they started something disruptive and defined the market, but somehow lost the edge (Cloud Foundry is two years after Heroku, four years after Amazon, etc).
I was chatting to my friend who worked for MS NZ in their sales team and we were talking about the usual "who's bigger, who are the main competitors" type stuff. He asked who we all thought MS' biggest NZ competitors were. Naturally I answered Oracle/Sun as one of the main ones. He just laughed though, then told me that it was VMWare. If he knew, then MS are surely pretty keenly aware of this.
VMware's cap is a fifth of MS's ($40B vs $211B), I had no idea they were that big. <a href="http://www.google.com/finance?q=vmware" rel="nofollow">http://www.google.com/finance?q=vmware</a>
It's obvious in retrospect.<p>Microsoft was about taking over people's hardware (i.e., protecting Windows' installed base), VMware is about helping people utilize their hardware to its full potential. It turns out that one of the fundamental thing we want to do with modern workstation and server hardware is run multiple OS instances on it simultaneously.<p>This surely sounded subversive, scary, illegal, and weird to MS leadership who expected users to do web, games, mail, and office apps on their hardware. MS required a per-instance license anyway, so how could they lose?<p>That said, I've heard good things about MS's virtualization technology, aside from the little problem of it requiring Windows for the base OS.
Not sure I would agree complete with this assessment. Reason Microsoft was able to get that kind of stronghold was due to applications(Word, Excel - though they copied these - and others vendor apps/drivers written exclusively for windows). It is pretty much the same reason why desktop Linux is not able to make much inroads into the windows desktop OS market(it's the apps). Of course Apple and Google are trying to just bypass this market altogther(handheld, web). But it is the apps those matter and not sure where does VMWare has the apps to lock folks into the VMWare?
OS Virtualization is necessary because the software stack has got very complicated. This is true not only of Windows, but on Linux as well. A working server has moving parts from web config files to database configuration to PAM. All these make redeployment from scratch a painful experience. It is often cheaper to just copy a working deployment and tweak it.<p>Microsoft, in particular, has made this worse by keeping configuration details in registries and not clearly identifying which keys should be exported for an application to continue working.