VMWare is repositioning its technology to distance it from Microsoft's Hyper-V product and plans to extend virtualisation technology from the server to datacentre.
Although Hyper-V is not as sophisticated as VMWare's flagship ESX Server, some believe Microsoft will convince users to try the low-cost alternative.
In another shot across the bows of Microsoft, VMWare's Virtual Datacenter Operating System product and strategy aims to free IT departments from datacentre operating systems such as Windows Server 2008, Linux and Unix.
VMWare's newly appointed chief executive officer Paul Maritz said he took the competition seriously and was realistic about what it would take to maintain the loyalty of IT directors.
"We know we can't afford to stand still," he said. "In any software business you have to be constantly refining your value proposition."
Maritz, who took over the role in July 2008 from company co-founder Diane Greene, was a major force at Microsoft. In his 14 years there, Maritz was promoted to the number three position, behind Bill Gates and Steve Ballmer. He was largely responsible for the success of the company's Windows Server strategy, which, during the 1990s, saw Windows establish itself as a viable alternative to Novell NetWare and Unix.
With his old employer now selling Hyper-V virtualisation, Maritz has his work cut out.
As he did with Microsoft in the early 1990s, Maritz is hoping to build strong links with third-party companies to develop a VMWare partner network.
Maritz said VMWare planned to increase and strengthen partnerships, and was forging partnerships with suppliers such as Cisco in networking and Symantec in security.
"We are looking for as many friends as we can," said Maritz.
William Fellows, principal analyst at The 451 Group, believes that under Maritz's leadership VMWare has every chance to grow in strength.
"[EMC chief] Joe Tucci would not have appointed Martiz if he didn't think he could do the job," Fellows said. "Maritz is very much an engineer and he has experience of building partner relationships and killing off the competition."
A year ago, in her keynote speech at VMWorld, Greene told delegates that VMWare was not an operating system.
What a difference a year can make.
Here at VMWorld in Las Vegas, Maritz is betting the company's future on the virtual datacenter operating system.
Can he do it? "I wouldn't bet against Maritz," said Fellows.