I am not sure this analysis holds. While Red Hat threatens VMWare (or, more specifically, its proprietary products alongside KVM threaten VMWare's products) I think the threat against Red Hat comes from other Linux (OpenSolaris-derived) distros that also offer the same KVM technology coupled to somewhat simpler, open-source, management tools.<p>VMWare doesn't really sell virtualization tools. They sell management tools for virtualized infrastructure. The sooner they get it, the better it will be for them.