Tech Darling VMware Falls on Microsoft Posturing

Virtualization forerunner can't compete with Redmond chatter
By Jonas Oransky,  Newser Staff
Posted Mar 25, 2008 12:04 PM CDT
The Exterior view of VMware headquarters in Palo Alto, Calif., Wednesday, Oct. 24, 2007.   (AP Photo/Paul Sakuma)
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(Newser) – Tech player VMware has experienced its own private Silicon Valley bubble in a single seven-month stretch: The virtualization software pioneer skyrocketed in value after its August IPO, and has since fallen apart on mere intimations of competition from Microsoft. The company, which allows computers to run multiple operating systems, has lost $30 billion in value in five months—and accuses the Redmond titans of spreading so-called FUD (fear, uncertainty and doubt).

Microsoft’s competing virtualization software is still in beta, MarketWatch notes, and VMware has an 85% share in its market, but analysts have cut price targets from a median of $95 to one of $60 since a grim January earnings report. The tech upstart has gone on the defensive, accusing Microsoft of “trying to restrict customers’ flexibility and freedom.”