XenDesktop.
Meanwhile the Server Virtualization space has been the fortress of VMware with VI3 and the new vSphere breaking all barriers to Server Virtualization.
While these two companies are dominating their own space in Virtualization, they are also actively trying to break into each other's strongholds by building their own products and fighting it out mostly on price point and simplicity.
Virtualize 100% of all DataCenter Workloads using vSphere:
IO Performance has traditionally been a weak spot for Virtualization products. This has hindered the
adoption of Virtualization for high IO intensive workloads like Databases. But with vSphere, VMware has drastically improved the IO performance reaching "just above 350,000 I/O operations per second". This should be good enough for even most IO intensive workloads.
One other good example of VMware's commitment towards 100% Virtualization is the addition of the new Virtual Hardware - SAS Drives. From the VMware docs:
Serial Attached SCSI (SAS) virtual device for Microsoft Cluster Service — Provides support for running Windows Server 2008 in a Microsoft Cluster Service configuration
You can see that VMware took all the extra effort to add this new virtual device just to ensure that MS Cluster Service in 2008 is a suitable candidate for Virtualization.
Citrix focuses on Virtualized Delivery of 100% of all Applications:
With the new releases of XenApp, Citrix can virtualize and deliver all the desktop applications available. With the new VM hosted App capability, Citrix has ensured the abaility to virtualize apps built for Desktop OSes like XP and Vista and that are not compatible with 2003 and 2008.
Also Citrix's commitment to Desktop delivery of highly bandwidth intensive applications can be observed from the adding the HDX support for Delivering Professional graphics applications over a 2Mbps WAN link.
OEMs and Partnerships to Strengthen the Weaker Arm:
While continuing to tirelessly innovate on Server Virtualization technologies, VMware has also been actively operating in the VDI space with VMware View. VMware has integrated the PCoIP technology from teradici and claims to have performances comparable to Citrix HDX. Managing User Profiles had been another drawback of VMware View and with the RTO Software OEM Deal, VMware has quickly added this capability to compete more strongly against XenDesktop.
Also Citrix has been actively partnering with Startups to offer management functionalities on top of the XenServer Virtualization platform. This is evident from the OEM of FT technology from Marathon and the LabManager and StageManager products from VMLogix.
Also Citrix has been engaging with the OpenSource community to build advanced capabilities on top of XenServer like the Xen Cloud Platform and the distributed vSwitch for XenServer/KVM.
It has been a very fierce battle between these two highly tech savvy companies and it is always good for the customers as long as there is such competition in the market. I don't believe one company is going to dominate the whole virtualization market. The adoption of Server/Desktop Virtualization technologies is definitely looking towards steep growth in the coming years and there is enough for these two giants and lots of other companies to share the pie.
