Suddenly, virtualization is going to mean serious competition with physical servers, even servers with a heavy CPU load. Other software vendors would be wise to follow this example, since we now see that Moore's law is hitting the wall in terms of gigahertz values. More performance in the future will likely come from additional CPU cores rather than from clock speed increases.
Growth in the near future is also much more cost driven than it was at the turn of the century. To stay in business, software vendors need to make sure their customers are staying in business, too. Everyone simply needs to be able to do more for less to stay competitive.
Support for virtualization is now arriving inside the CPUs themselves. Both AMD and Intel are integrating support for virtualization (VT), making more features available when running VMs on them. This will be vital to ensuring better execution security, since the ancient x86 architecture was never designed with any kind of virtualization in mind. Thankfully, it has evolved somewhat, since it was originally not even designed with multitasking in mind!
Limitations Of VMWare
There are some obvious VMWare limitations, of course. There is no support for any operating system not running on the x86 architecture yet, and there is no emulation support of any kind around. In a way this is good, since it ensures the best performance on the VMs running only in native x86 mode. The drawback is that it is impossible to get rid of those old boxes running 'exotic' hardware. ESX is already ported to Sun hardware - at very low prices - and you can already run it on all the new AMD based servers if you want to (V20, V40 2100 and 4100). You cannot run the Sun operating system under ESX yet, but that is in the works according to the Sun reps here.
If you would like to virtualize to gain performance with servers running at or close to 100% CPU utilization, you are on the wrong playing field. Bear in mind that virtualizing an OS is not doable without a performance penalty. Running 16 servers on the same box also means virtualizing 16 operating systems. Therefore, make sure you have enough hardware resources under the hood before even considering running virtualized systems.