My colleague Paula Rooney just posted Oracle: Our full virtualization stack beats VMware. I thought I'd add comments coming from another viewpoint to the discussion.
Regardless of the truth of Oracle's claim of superiority over VMware's products and ecosystem, there are other forces at work. IT and Facilities executives are not charged with having the best technology. They're expected to serve the business mission in a cost effective reliable, efficient and effective way.
They have a tendancy to have long memories and work with suppliers that have been helpful, friendly and have supported the business' mission.
They tend to leave workloads and solutions in place until they no longer serve the business need rather than jumping from new technology to the next new technology.
They make changes very, very carefully. Replacing something that is working with something else that does the same thing is rather unlikely.
While Oracle's bravado is well known in the IT industry, those who love and work with VMware's products are unlikely to be swayed.
As with other suppliers of IT, Oracle often expects IT and Facilities exectuives to violate the golden rules of IT (see Reprise of the Golden Rules of IT) and it is rather unlikely that they're going to do that unless there is significant outside pressure. So, if new regulations appear or there is a major shift in some business requirement, moving from one technology to another or moving from one supplier to another is certainly a possibility. If things are going pretty much as planned, relationships with suppliers are likely to stay the same.
VMware is clearly in the cross-hairs of many other suppliers in many different virtualization technology markets. Citrix, Microsoft, Red Hat and now Oracle are attacking. Citrix focuses on application delivery. Microsoft focues on Windows and Windows-related applications. Red Hat plays the open source is always the answer card.
It is clear that Oracle is going to have to do something completely different that is also better, cheaper and faster to get the industry's attention.