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VMware reminds me of Palm in 2000... They start something which will change the entire industry but somehow they are loosing their lead rapidly...
Lol. Can you explain how?
Alternative virtualization platforms are proliferating and get better all the time. Vmware has an early lead like Palm did and is correctly optimizing revenue from that lead but down the road ... where is palm today?
Agreed. Between Citrix (xen) and Redhat (kvm), as well as the related open source offerings, keep getting better.

I think the main area that VMWare still has a win, from people I know who use it, are management tools and the ability to prioritize/allocate/throttle IO on network block devices (SANs) per vm.

VMware has lost focus on where the expense savings monetize for virtualization. VMware captured virtualization of all the small/medium application servers; and built a company. The focus lately has been convincing customers to virtualize all the large application servers. Thus, VMware could claim victory for creating a fully cloud enabled data center.

But, VMware lost the focus on engineering a fully virtualized application cloud; and let the MBAs direct the buffalo hunt. Just like Palm. And now the buffalo are going to stampede all over the product and VMware is gonna bleed.

Vmware should just ignore the largest buffalo -- if your application server uses (suggestion) 64GB of RAM or more; no vRAM is counted against licensing. Those buffalo are tough, not too tasty, and the risk and resource requirements are not worth the pain. The small nimble buffalo are where the tasty hunting is best.

Hyper-V is gonna eat VMWare's lunch. 2008 Server is kicking ass and taking names, and is indeed a solid product from what I hear. MS's next iteration of server+virtualization will be the death knell for VMWare unless VMWare drastically reduces prices and comes up with remarkable innovative improvements in the next few years.
Hyper-V is a hail mary play, in case EMC/VMWare does something really stupid to screw up a good thing.

VMWare is an enterprise product. How many big enterprises are using Hyper-V? (A: Zero, officially anyway)

They're still charging based on vRAM. I don't see this as much of a backdown, really.
This is not a concession. For my essentials plus license I get 256gb RAM under 4, but now even under the amended new licensing I only get 32gb. Still not happy.
Ram prices recently fell dramatically. (the really dramatic drop is that 8GiB modules are now priced reasonably; it used to be you'd pay 2x or more per gigabyte for higher-density modules, and now the price per gigabyte drops slightly as density increases, I mean, until you get to the 16GiB modules, which are still ridiculous.) This change has triggered a surge in ram density in newer servers.

It looks like VMware is trying pretty hard to capture most of the surplus value created by the cheaper ram.

I mean, it's been long said that VMware will look at how much money you can save by virtualizing and consolidating your old hardware, then they try to charge just enough less than that number to make the project still worth doing; In the past, I think, this has been seen as more reasonable, as vmware is helping to create some of that value.

Moving to grab some of the surplus value created by cheap high-density ram, something VMware has nothing to do with, I think, has been seen as unjustified and greedy in the SysAdmin world; it remains to be seen if still charging by the gigabyte of ram but just charging less will be accepted.