Competition is good. I think it can only make VMware stronger. One thing that's important to keep in mind is that ESX is a third-generation hypervisor. What we see is Xen trying to catch up with what VMware has done already.
Paravirtualization is an area where Xen touts market leadership. VMware has announced their plans for paravirtualization, and VMware has the industry relationships, I think, to make it work better -- their tight relationships with Intel, AMD, Dell and IBM. It's the relationships with those hardware manufacturers that I think is very important.
[Right now] paravirtualization certainly is something where people look to Xen and say, "That's something VMware doesn't offer." It's something that VMware hasn't needed to offer, but it's something that's becoming a little bit more important these days as VMware moves closer and closer to the center of the core data center.
Xen is good for business, it's good for competition and it's just going to keep VMware on their toes.
Return to the VMWare FAQ guide and read the rest of Rod's expert responses.