Microsoft Plays Catch-Up In Server Virtualization

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Microsoft arrived late to the virtualization market and still has holes in its product portfolio. As it fights for market share, partners say Microsoft's traditional strategy of pricing competitors out of the market will be tested like never before.

The rapid acceleration of the virtualization market was recently underscored by VMware's strong $1.1 billion initial public offering and Citrix Systems' pending $500 million acquisition of open source virtualization vendor XenSource, expected to close in the fourth quarter.

Microsoft, which partners with Citrix, currently offers Virtual PC and Virtual Server 2005 for desktop and entry-level server virtualization; SoftGrid for application virtualization; and terminal services for the presentation level.

What Microsoft doesn't have right now is a server virtualization product to compete with popular offerings such as VMware's ESX Server. That product, the Viridian hypervisor, is slated to arrive in the second half of next year, although Microsoft has already delayed the beta release.

This delay means that Microsoft is losing further ground in the virtualization market and leaving partners with no choice but to sell competitors' solutions, several sources told CRN.

Microsoft is behind in the mission critical virtualization market because it's missing key features found in competitors' offerings, says Cor Knijnenburg, CEO of Core Consulting, Plano, Texas.

For example, VMware's VMotion product, which makes it possible to move running virtual machines from one physical server to another, has no equivalent in the Microsoft virtualization portfolio. "If you have a mission critical application in a virtual environment, that's a useful tool," said Knijnenburg.

Microsoft plans to spark widespread adoption of its virtualization products through competitive pricing, says Larry Orecklin, general manager of Microsoft's System Center and Virtualization group.

"Virtualization is an important feature of the operating system and shouldn't be a technology that organizations have to pay more in order to utilize," said Orecklin.

But cost isn't neccesarily a primary motivator for companies looking to add virtualization, says Chris Ward, senior solutions architect at Greenpages, a solution provider in Kittery, Me.

While some VMware competitors market products similar to ESX Server at a lower price, VMware is perceived as the most mature product on the market, and customers are willing to pay a significant amount more to go this route, Ward says.

"Customers don't necessarily take price into consideration when it comes to virtualization, probably because they're not as concerned due to ROI of virtualization and the amount of money they save from not having to buy new hardware," said Ward.

NEXT: Microsoft Fights Back

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