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Computerworld - VMware Inc. expects 14,000 attendees at its annual user conference in Las Vegas this week, including workers from more than 200 trade-show exhibitors. That's a 30% increase over last year's attendance — clear evidence of VMware's influence. But VMworld 2008 will also be the focal point for the gathering storm of competition that the virtualization market leader faces.

Among the companies fighting for users at the conference will be the first serious challengers to VMware's dominance of server virtualization. That includes Microsoft Corp., which released its Hyper-V virtualization hypervisor in June, and Citrix Systems Inc., which today plans to announce a new version of the XenServer software that it acquired last year.

VMware has let competitors set up booths at its shows since the first VMworld in 2004, but it still controls the conference agenda. One scheduled presenter, Simon Crosby, Citrix's chief technology officer, said his slides had "to be vetted by the censors" — a reference to VMware. He added that his talk was "carefully arranged" by VMware to take place in the afternoon on Thursday, the last day of the conference.

Indeed, VMware continues to set the agenda for the entire virtualization market. Rivals and hardware vendors alike have timed product announcements to coincide with VMworld. In addition to Citrix's scheduled rollout, Microsoft last Monday said, at a launch event in Bellevue, Wash., that it would ship a free stand-alone version of Hyper-V and an upgrade of its virtualization management tool within 30 days.

And on Wednesday, Sun Microsystems Inc. — which will also have a booth at VMworld — formally announced its first virtualization offering that supports multiple operating systems.

Also last week, Dell Inc. added two blade servers geared toward virtualization. And Hewlett-Packard Co., which announced a set of virtualization-oriented products two weeks ago, will unveil more offerings today, including a server based on a six-core Xeon processor that Intel Corp. is announcing in conjunction with VMworld.

As competition has picked up, though, VMware has lost its ability to control one important thing: pricing.

In July, VMware made its low-end ESXi hypervisor available free of charge. Then last month, it adopted a new pricing scheme for its Lab Manager tool for developers, lowering the starting price for deployments from about $16,000 to between $2,000 and $4,000.

Users are taking advantage of the new era of free hypervisors and reduced pricing for the software layered on top of them.

Kevin Sonney, IT manager at iFloor Inc., a flooring retailer in Tukwila, Wash., said if VMware's executives were standing in front of him, his message would be to "stay price-competitive" with Microsoft.