Virtualization vs. Web Services

I’m at CalTech listening to physicists talk about the software side of the new Spallation Neutron Source at Oak Ridge. One of their major headaches is the difficulty of deploying their code: a typical application has dozens of complicated modules, each with dozens or hundreds of dependencies. Their solution is to host a web service rather than try to deploy on end users’ machines, which has got me thinking: are web services and virtualization competing solutions for non-data-intensive applications? (Non-data-intensive because if your app needs to grind a few terabytes to produce an answer, you’re not shipping copies of it around.) Does anyone know of any studies/comparisons of the tradeoffs between “here’s the over-the-web API” and “here the VM”?