Expect Virtualization "Co-opetition" Near Term

Implications: •     Onus on VMWare, XenSource, etc. to comply with Microsoft software, not the other way around
•     Microsoft has virtualization software of their own
•     Expect Microsoft cooperation today, competition tomorrow

Analysis: Cooperation among Microsoft and VMWare or Microsoft and other virtualization vendors, benefits the end user/customers, but with Microsoft producing a lot more software for the data center - including their own virtual machine and virtual pc software - the competitive forces are very apparent. 

Microsoft, the largest software vendor in the world, is the "800 pound gorilla," the "incumbent" and the market leader in multiple software categories.  As a result, the onus is on others - VMWare, XenSource, etc. to find ways to make their virtualization offerings work properly with Microsoft, not the other way around.

As Microsoft "cooperates" with other vendors they gain more than just kudos from competing vendors.  They gain valuable insight into competitors software code, allowing them to enhance their own offering.  We can expect more of this "co-opetition" in the near term until Microsoft is ready to go big with their own virtualization products.  Microsoft will continue to cooperate today, but expect their virtualization software will be competition tomorrow.