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By Carl Howe

In the wake of Steve Jobs tweaking of Microsoft's (NASDAQ:MSFT) Windows Vista yesterday (e.g., "Redmond, start your copiers") at the World Wide Developer's Conference, Microsoft has decided to get in a swing or two of its own. It has now officially killed VirtualPC for the Intel Mac (NASDAQ:AAPL).

This follows its announcement in January that it couldn't predict how long it would take to port this virtualization software to the Intel (NASDAQ:INTC) platform, which led us to recommend that Steve Jobs give Diane Greene, CEO of VMware, a call to see if she might have a few resources to throw at the problem. Well, he did, she did (as was represented by the announcement yesterday that VMware will be available for MacOSX), and Microsoft is taking its ball and going home.

Isn't it funny how little $635 million VMware (at least that was its price when it was sold to EMC) has more resources than Microsoft? This is the power of niches. For Microsoft, the VirtualPC business is a rounding error on their balance sheet. For VMWare, this is their business, and they make real money at it. The result: Microsoft just threw away the millions of dollars it spent to acquire Connectix, the maker of VirtualPC, since most of the buyers of that software were Mac users. At the time of that purchase, speculation was the value of the purchase was really about incorporating virtualization technology into Windows Vista. But with Windows Vista shedding features like dandruff to make its ship dates, those speculations will likely come to nought.

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