Here is an article that I feel is right on the mark as Microsoft takes aim at VMware.  The artical came from a Windows IT Pro.  I have re-posted it as many will not have access to the site and was written by Paul Thurrott.

Years ago, I spoke with VMware’s CEO at the time, Diane Greene,about Microsoft’s coming threat. I was curious why VMware wasn’t pursuing antitrust complaints against the software giant, as Microsoft had announced that it was going to bundle a hypervisor-based virtualization platform with Windows Server. (That software was since released as Hyper-V.)

VMware had no interest in pursuing Microsoft in the courts, I was told. Instead, the company would compete with Microsoft in the open market, and Greene was convinced that VMware could maintain its technological lead.

I told her that was a mistake. Microsoft understood then, as now, that virtualization is key to the future of computing, and it would go after this market with the same dogged determination it used previously in establishing NT as the low-cost workgroup computing standard.

I’ll spare you the serial-killer analogy I used at the time, but you get the idea. Microsoft isn’t a competitor to be trifled with. And you don’t want to be in its crosshairs.

Today, Microsoft has released its second-generation Hyper-V technology, and though VMware still maintains a huge lead in the virtualizationmarket, Greene is out. She’s been replaced by Paul Maritz of Microsoft (and NT) fame, and it’s equally notable that his number two, Tod Nielsen, is also a Microsoft alumnus.

As you probably know, VMware held its annual VMworld conference last week, and I spent a bit of time with Bogomil Balkansky, the vice president of product marketing at VMware. There was a bit of competitive did-not/did-too silliness between VMware and Microsoft at the show (it amounts to Microsoft being punished for infractions at last year’s show), but rather than get bogged down in that, I’d like to focus on VMware’s products and strategy and how they compare to what Microsoft is doing.

At a very high level, it’s fair to say that VMware got here first, has the more mature technology, and has a decidedly cross-platform approach that’s lacking on the Microsoft side. VMware, for example, can claim, as Balkansky did with me, that Microsoft’s chortling this year over closing the gap with Live Migration capabilities is cute, but VMware had that feature (VMotion) years ago. The point here is clear: While Microsoft’s virtualization solutions are starting to catch up, they’re still years behind what VMware is doing.

There’s some truth to that. VMware’s current virtualization platform, vSphere, which is based around the ESX Server 4.0 hypervisor, is still in some ways dramatically more capable than Hyper-V. Microsoft will tell you, however, that VMware’s solutions tend to be more expensive–in some cases a lot more expensive.

Maybe you get what you pay for. But Microsoft’s virtualization strategy should be familiar to anyone who was around in the NT days: Establish a beachhead as the low-cost alternative, add capabilities until you’re at least comparable to the competition, then watch your growth start outpacing that of the entrenched market leader.

One thing’s different this time, however. While Microsoft had no real server presence in the early days of NT (at least outside of workgroup-based LAN Manager installs), this time around the company is a major player in the server market. And when Microsoft shops start looking around for a virtualization player, the freebie that comes with Windows Serveris an obvious option. Especially when, again, the differences between that solution and the VMware solution are starting to dwindle.

In short, VMware’s position hasn’t really changed much over the past few years, but I think we’re on the cusp of a dramatic change in the market. Fortunately for VMware, the market is only going to grow, and this year’s gains with vSphere 4 hint at years of growth to come.

But with the overall market growing, Microsoft’s share of that market is going to grow too. And eventually, I feel, it will outpace VMware and other competitors (and partners) like Xen and Citrix.

It’s way too soon to start the “VMware is doomed” talk. But VMware needs to do everything it can to prevent the shedding of share to Microsoft. This will involve lowering prices, inevitably, and giving away more of the crown jewels.

But that’s a natural side effect of the commoditization of a market that was previously a niche specialty. Today, virtualization is on its way to becoming a common and accepted partof the computing experience for businesses of all sizes. And there’s no reason VMware can’t emerge as a major player–perhaps the major player–going forward. But it’s going to have to start taking Microsoft a lot more seriously.

You’ve been warned, VMware. Again.