Q: How do you compare the competitive position of Microsoft and VMware compared to earlier competitions, like NT vs. Novell's NetWare, or Exchange vs. IBM's notes. Is Microsoft in a stronger position in virtualization than it was in those situations?

Muglia: I did NT way back when we were in that Novell situation when Novell had a very strong market position and was also involved in Exchange in the very early days.

And one thing I think is very different in a sense in virtualization is that it's very early in the marketplace. I think we actually have a very competitive offering in the marketplace at a very early stage. We're still in a world where roughly 12 percent of servers are virtualized and we see ourselves in a world in five or ten years where that number is going to be well over 50 percent and ultimately will be ubuquitous.

The product we have is extremely competitive in the market, certainly compared to how competitive those early NT products were in the market relative to NetWare, I remember that very well.

Q: What about the resentment that a lot of VMware customers have expressed about Microsoft and the potential that its success will damage VMware as a company and the investment customers have made in its software?

Muglia:

First and foremost I think customers make rational business decisions.

Vmware has been the only game in town if companies wanted to take advantage of the benefits that virtualization provides in their mainline business systems.

Ultimately what I think happens is that as business moves forward and people look at new opportunities in the market, there's now an environment that there are some great choices that customers can make [with Hyper-V and Virtual Machine Manager 2008 and Systems Center]. And there certainly are areas where customers will continue to choose VMware and I'm sure that marketplace will move forward.

On the other hand, we'll have an offering in the market that is rock solid technically, that performs at the same level as ESX, provides a broader set of management capabilities, including VMware in addition to the Microsoft environment, it is completely based on Windows and all the skill sets that Windows administrators know and it will be about a third of the price that VMware offers.

And in that sort of environment, we expect a lot of customers going forward to make the rational choice and choose the Microsoft offering.

© 2009 CXO Media Inc.