I should clarify my opinion on this (and it's just my opinion). The virtualization marketspace is large and there are many areas to grow into. Parallels is targetting certain users and use cases. VMware is targetting certain users and use cases. Xen is targetting some. QEMU. Virtual Server. They all have users and are being used for different things. I think Parallels is playing things smart by getting into the Mac market early and targetting the users there with a low priced product, and that may secure a position for them there. But it's not at a point where I feel VMware has to fear it. Keep the company in mind, yes. But "VMware fears Parallels in a big way" is a bold statement to make :)

(My opinion is my own, and not necessarily that of VMware.)