VMware got off to a high-flying public debut Tuesday morning as its IPO share price skyrocketed more than 75% in morning trading, a reflection of the company’s strong potential and its market-leading position.

The shares opened at $29 and by midday on the East Coast were trading for $50.75 with a volume of more than 26 million shares. The company reported that it raised more than $950 million with the IPO. The public offering also was a windfall for publicly traded EMC, the data storage giant that bought VMware for $602 million in January 2004.

VMware, trading now under the symbol VMW, is recognized at the leader in the virtualization market, which has become one of the hottest IT technologies on the basis of its consolidation and cost cutting capabilities.

“I expected this to be a hot issue,” says one observer who asked to remain anonymous because of a business relationship with VMware. “You have a company dominating a field and that field is likely to grow exponentially. The only looming threat on the horizon is Microsoft itself.”

The 10-year-old VMware has 3,000 employees and is projected to earn $1 billion in annual revenue for the first time in its history. The company’s profits for the first-half of 2007 were $75.3 million, more than double profits in the same period of 2006.

Microsoft, which is playing catch-up, will not have its flagship virtualization technology out until next year. Windows Server Virtualization (WSV), which is an add-on to Windows Server 2008, won’t ship until mid-2008.

Microsoft is pushing its current Virtual Server 2005 R2, but the general consensus is that it’s no match for VMware’s corporate ESX platform.

Microsoft has had a rough go with developing WSV, which was originally built into Windows Server 2008 before delays forced Microsoft to break it out into a separate shipment.

On Tuesday afternoon, Microsoft tried to steal some thunder as VMware stock was flying high.

Larry Orecklin, general manager at Microsoft for System Center management tools and virtualization, posted a short entry on Microsoft’s virtualization blog outlining the company’s strategy. He said the focus was in three areas: integrating the technology into the operating system, offering virtualization from the desktop to the data center, and management of physical and virtual assets. He also said Microsoft’s Virtual Machine Manger, which won’t support WSV in its first release, would hit gold code at the end of this month.