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Jul 16 2008   3:18PM GMT

What is the strategy behind Microsoft’s release of Hyper-V?

GuyPardon Guy Pardon Profile: GuyPardon

Will the virtualization wars of the ’00s parallel the browser wars of the ’90s?

Bill Gates may not be actively involved in pulling the levers at Microsoft on a day-to-day basis after his retirement earlier this month but the Redmond-based software giant is no less focused on “maximizing shareholder value.”

That has generally meant moving powerfully into new markets for software, often once other companies had proved the viability of such ventures.

In the 1990s, the threat of a network computer from Oracle and Sun and then a browser-based computer from Netscape resulted in an epic battle for the desktop.

Now, of course, Google is the Internet juggernaut that Microsoft is now confronting on multiple fronts, especially with respect to search and office productivity applications. You’ve no doubt come across the term “cloud computing” by now.

When it comes to virtualization, however, VMware is the story. VMware, easily the global leader in the server virtualization market, with more than 80% market share at the beginning of 2008, pulled in more than $1.3 billion dollars in revenue last year.

Redmond noticed. (So did TechTarget: SearchVMware.com launched in 2007.)

In June 2008, Microsoft officially released Microsoft Hyper-V Server. A chorus of industry analysts immediately noted that Hyper-V directly competes with VMware’s products.

In its initial release, however, the only non-Microsoft operating system to receive official support for virtual machine creation with Hyper-V was SuSE Linux. Xen-enabled Linux distributions can, however, be run using paravirtualization. Microsoft engineers are working towards support for Red Hat Enterprise Linux  in the next iteration. Other operating systems, like Ubuntu or Fedora, have been successfully installed by members of the development community using a variety of patches and workarounds. Unlike VMware, Hyper-V does not initially support “live migration,” a feature in which virtual machines can be moved from one server to another.

The massive install base of Microsoft users, substantially lower pricing plans when compared to VMware’s price points, integration with Microsoft products and (crucially) inclusion of Hyper-V with Microsoft Server 2008 are all likely to help Hyper-V gain traction.

Questions may linger about bundling Hyper-V with Microsoft Server 2008 if adoption soars to the detriment of VMware.

That the dismissal of co-founder and CEO Diane Greene by the VMware board earlier this month coincided so closely with the introduction of Hyper-V also no doubt reflects growing concern over increasing competition in the market, including Citrix’s XenServer.

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