VMWare’s (VMW) Shares Can Fall More As Microsoft (MSFT) Enters The Market

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By Douglas A. McIntyre Published
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Microsoft (NASDAQ: MSFT) play a cut-throat game in almost every sector the software market it enters and investors at virtualisation software company VMWare (NYSE: VMW) know that. VMW shares have gone from over $125 to about $58, even thought revenue at the company is growing at about 80%.

Microsoft is about to come to market with its own virtualisation product, which helps servers run multiple programs. To try to stay ahead of Redmond, VMWare has cut a deal to ship its software on some servers sold by Dell (NASDAQ: DELL), Hewlett-Packard (NYSE: HPQ), and IBM (NYSE: IBM). According to the FT "By pre-installing its software on the computers that companies use to run billing software, serve up web pages and perform other essential tasks, VMware hopes to gain a distribution advantage."

Microsoft is about to introduce its Windows 2008 server software which could get is a footprint in the virtualisation business fairly quickly. Just because Microsoft is behind does not mean it will in any way fail to push every advantage to dislodge VMW from its leading position in the market.

By bundling its software into its core server product, Microsoft is taking the fight to the enemy. VMW shareholders better be ready to see their shares go much lower.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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