VMware is in the news these days for two related reasons.

First, VMware Fusion for Mac OS X recently went on sale. Fusion enables Mac users to run Windows and other operating systems simultaneously with their regular Mac applications, which pretty much solves the old problem of being forced to choose between Windows and Mac systems.

Fusion puts VMware in competition with Parallels Desktop 3.0, which I blogged about a month ago. I’ll be ordering Fusion myself, and I’ll blog about it when I get it running.

The Fusion release is only half of the story for VMware this week.

The other half is more forward-looking. At the LinuxWorld conference in San Francisco, VMware co-founder Mendel Rosenblum described how, in the future, applications may be distributed in the form of complete virtual machines, including all the operating-system code they need. (See the PC World story, and the InformationWeek story; both are worth reading.)

Rosenblum calls this approach “virtual appliances,” presumably because the application can be treated as a self-contained object that performs a specific purpose without requiring a lot of configuration, as conventional applications sometimes do when being installed into a variety of different operating systems.

I agree with this concept. In fact, I’ve been promoting it for several years. I mentioned it in my speech at PC Forum in 2005. (Read the transcript).

The benefits of this approach go a long way, including simpler software development, improved reliability and stronger security.

Rosenblum went on to imply that this approach could change the lines of power in the software industry, and I think he’s right about that too. Traditionally, operating systems have played two roles: managing hardware and providing services to software. Virtualisation separates those functions, which could separate the interests of hardware and software developers.

Although all the major operating systems still provide both functions, there’s no reason that the same OS vendor will ultimately dominate in both areas. If one vendor internalises the consequences of virtualisation much before the others, I expect that it will enhance its competitive position.

But I think this cat is well and truly out of the bag now, and I see no other reason for virtualisation to give Linux an edge over Windows (or vice versa); the relative merits of each platform are still preserved, even in a virtualisation-rich environment.

In fact, I think the greatest risk and the greatest opportunity belong to VMware. Microsoft already has its own Virtual PC product (as I mentioned just a few days ago), which puts VMware at a disadvantage for Windows-based hardware and applications.

VMware can still have a good business in providing virtualisation support for Linux and Mac OS, however, and this creates a unique opportunity: applications packaged into VMware-compatible virtual appliances could gain instant cross-platform compatibility.

I’m glossing over a lot of important details, of course; this is a blog entry, not a business plan. But it sounds like VMware’s Rosenblum has this opportunity figured out, and I suspect that Microsoft’s Virtual PC managers do too. It’ll be interesting to watch this market develop over time.