VMware Inc. (NYSE: VWM) sells software integral to the operation of websites and other network computing resources. VMware's virtualization software can make multiple physical computers behave like a single, ultra-powerful "virtual" machine, or split apart a single physical machine and make it behave like multiple computers (for example, to host several different websites on the same server). With virtualization software, websites can be run more cheaply and reliably by allowing webmasters to deploy resources "virtually" on an as-needed basis, rather than forcing them to keep excess capacity up and running to handle occasional traffic spikes and crises. In addition to software sales, 30% of VMware's revenue comes from services such as maintenance and upgrades and training. These revenues are recurring and create steady, ongoing cash flows.

One of the main barriers to the penetration of virtualization technology is the perceived complexity of implementing a virtualized system. VMware is currently the leader in the virtualization market with an estimated market share of 80%.^[1] The main risk to VMware's long-term success is impending competition from Microsoft, which also offers virtualization software. VWware is ready to move into Microsoft's customer base by offering more than virtualization as witnessed with its recent acquisition of Zimbra, a provider of open source email and collaboration software. VMWare is gearing up to tap into the Microsoft Exchange market by combining its virtualization technology with the Zimbra email platform.^[1]

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