Typical investors and fund managers don't seem to understand how revolutionary VMW's virtualization software really is or how it offers incredible cost savings as an upgrade for aging server installations. Because of this, I really think this company is fairly immune to economic vulnerabilities of other tech companies. In a slower economy, companies will continue to look for ways to save money.
As to the large number of shorts... when this stocks price starts to move up with a strengthening economy, they'll be "stampeding for the buy desk". Some are sure to get burned.