I don't think it's going to have much effect initially. You talk about being the first on the block to try the new Microsoft OS, but most people I talk with aren't willing to stick their necks out. Really, how much functionality can you put into a single operating system and really make it secure and robust?
Windows [Server] 2008 is going to have a hypervisor; it's going to have embedded virtualization in their multipurpose OS. Is it going to be a big, big impact on VMware? Sure, the die-hard Microsoft customers are going to be very excited about that, but then again, like Xen, it's the difference between a 1.0 hypervisor and a third-generation hypervisor. Is it going to have a huge effect? I don't think so initially.
Again, I think the hypervisor is going to become a commodity item. You need to look at the higher-level functions. The management, the feature sets -- those are going to be the things that are important in a virtual infrastructure.