Microsoft to Take on VMware in Virtualization

Microsoft (MSFT) is revving up its plan to take on VMware (VMW) and other players in the emerging market for virtualization software.

Microsoft’s has said previously that its “Hyper V” server virtualization software will be included in the coming release of Windows Server 2008 at no extra charge; it will compete directly with VMware. Larry Orecklin, general manager for server and tools marketing at Microsoft, notes that 90% of servers run at less than 10% utilization.

But Microsoft is now taking a broader view of virtualization, laying out a world with not only server virtualization, but also application virtualization (using something called “Microsoft SoftGrid Application Virtualization”; presentation virtualization, with Microsoft Windows Server Terminal Services; and desktop virtualization, using Microsoft Virtual PC and Windows Vista Enterprise Centralized Desktop. It boils down to a world of shared, flexible resources, taking the cost-savings inherent in server virtualization and spreading them across the computing spectrum.

In short, the company intends to make a company-wide push to accelerate the adoption of virtualization. As part of the strategy, the company is acquiring San Jose-based Calista Technologies, a startup with technology targeted at improving end-user experience for virtualized desktops and applications. Remember the thin client strategy Sun Microsystems (JAVA) and Oracle (ORCL) and others have talked about in years gone by? It’s back, now in the guise of virtualization.

VMware’s early success in server virtualization software - and its impressive debut as a public company - have put the concept of virtualization in the spotlight. Microsoft intends to take the concept further. In addition to the Calista acquisition, the company is announced an expanded alliance with Citrix (CTXS) - which recently spent $500 million for virtualization software start-up XenSource. Microsoft announced more flexible licensing options for virtualized versions of Windows Vista. And the company is offering new tools to aid customers in determining how to adopt virtualization on their servers and desktops.

Bob Muglia, senior VP for Microsoft’s server and tools business, on Tuesday is issuing a lengthy “executive email” to the company’s employees, partners and customers laying out MSFT’s strategy for the sector. Microsoft is holding a meeting for customers on its virtualization strategy Tuesday and Wednesday in Redmond. Shanen Boettcher, general manager of Windows product management, said tomorrow Microsoft “will be talking about how to turn virtualization into reality for customers.”

Terms of the Calista acquisition were not disclosed. Investors in the startup included Greylock Partners and Lightspeed Venture Partners.

Comments

[sunrises]

Hi Eric:

Isn't VMW still far ahead. In fact, VMW has innovation at it's foundation and aren't they the pioneers? Why doesn't MSFT merge or buy out VMW if intends to mimic?

[sunrises]

Eric:

Will VMW reach close to $89 in near future? Understanding it's valuation is far higher and in this market condition. Thanks.