the answer is simple 40-50% of what? No one knows the value of the virtual marketplace. Example - Microsoft had a great quarter and the price of their stock goes down because they participate in a very mature market which has a much more definable market size. When it comes to "growth" stocks, you just don't know what is out there. I am not arguing that this is not a great company, but until this market becomes more defined, the stock price will not make any sense and will be volatile.
If you don't understand the value of virtualization software, then you really don't understand storage technology. VMWare produces virtualization software that goes BEYOND the server virtualization that analysis ONLY talk about.
VMWare virtualizes entire datacenters, from NAS/SAN attached storage to enterprise desktop enviornments. Microsoft, Xen, Oracle are jumping in and don't have near the type of product.
They are making money hands and fist and the fact that they will continue to do so in the next couple of years to come will bring in buyers.
Here is one reason all you knowledgables ignore. If virtual machines are sharing the same hardware and if all the data is still on the same hardware, there are security implications. You cannot convince many datacenter operators that the virtual machines are indeed really separate, unless you have virtualization enforced in hardware.
VMW has an 18 month lead. That means they have a year and a half to help build out as many data centers as they can. And it's not as if somebody catches them at 18 months and 1 day. VMW is still moving forward while the competitors chase.
If you're running a data center, and things are working well, why on earth would you switch vendors? Might there be just a tad of downside to disrupting the architecture at that stage?
And the hardware vendors? They're not manufacturing hw for Oracle.
VMW will take its lumps, but the so called threat of competition just isn't there.