VMWare may be the king of virtualization, but that doesn't mean everything is peachy at the top. Despite owning a huge majority of the market, VMWare had disappointing sales in the last quarter that ultimately caused its shares to drop significantly in value. The company saw a large boost in share value after going public not long ago, much like Google did, but they do not have the mass to keep it up. Now the exact opposite has occurred, with a 25% drop in value.
Despite the bad news, the CEO of VMWare still had many good things to say about the state of the company. VMWare has some very difficult obstacles in front of them. Microsoft is pushing their own virtualization suite, Xensource and Citrix have combined to boost their offering even further and all of that is still depending on enterprises picking the technology up. VMWare does have a huge advantage in terms of development and marketshare to play against those competitors, but those advantages won't last forever.