Now that VMware and Microsoft both offer the hypervisor free, is there any reason to use Microsoft virtualization?

Sure. If you're a big Microsoft shop, enjoy getting support from a single source and don't need VMware's extra features, Hyper-V can be a good fit. "If Virtual Machine Manager [Microsoft's management suite] and Hyper-V together meet your needs, and the price is lower, why not?" Gillett says.

"It's a matter of personal preference," DiDio says. "If you have a lot of VMware installed and you love VMware, wow, the choice just got easier. On the other hand, yeah, there are reasons to go with Hyper-V. A lot of it comes down to licensing."

The question of whether it's cheaper to go with VMware or Microsoft isn't always cut-and-dry. The Microsoft Virtual Machine Manager list price is US$499 for five physical servers, which seems to give Microsoft the edge. But VMware argues that it can deliver more virtual servers without a performance hit than Hyper-V, resulting in a lower "cost per virtual machine." Each enterprise will have to perform its own cost-benefit analysis.

"It comes back to your needs," Gillett notes.

Will this move help VMware?

Time will tell, but analysts think it's the right decision. Gartner analyst Thomas Bittman had urged VMware to give the hypervisor away for free and focus on making money off management tools.

VMware's stock prices have dropped significantly this year. The CEO change and move on pricing could be seen as initial steps toward regaining the trust of investors.

"It looks like in the short term Paul Maritz is willing to sacrifice revenue . . . in order to go up the stack, because where they're really going to make their money is the [VMware Infrastructure] platform," DiDio says. "Paul Maritz has his eye on the prize. He's taking a very long-term strategic view of things, which is the right thing to do, and not just looking for short-term profits."