Microsoft Plays Catch-Up In Server Virtualization

"The point where licensing costs come to play is that Microsoft Virtual Server is a free download, whereas VMware ESX Server is not free," said Morimoto. "And if an organization plans to cluster their servers, which is pretty common these days for high availability environments, Windows clustering services comes with Windows Server R2 Enterprise and Datacenter at no additional charge."

When Viridian does arrive, Microsoft may find that organizations that have already chosen a virtualization vendor aren't willing to switch just because Microsoft has a cheaper product, according to one East Coast Microsoft Gold partner.

"Microsoft's opportunity will be with those that haven't yet made substantial virtualization investments. They're not going to go into organizations with VMware and convince them to change at this point," said the source, who requested anonymity.

Another challenge Microsoft faces is that nearly every other virtualization engine on the market is based on Linux in some shape or form, says Ward. "And you can be pretty sure that there's no way that Microsoft will have any Linux embedded in Viridian when it comes out," he said.

In terms of benefits, the bare metal footprint and the ability to customize the kernel are the key reasons why many organizations prefer Linux based virtualization, says Ward. With so-called hosted virtualization, the virtual layer runs on top of an operating system, but with bare metal virtualization, the hypervisor runs on the hardware itself.

"In a virtualized environment, you don't want the kernel to eat up resources and CPU cycles, and it's easy with Linux to customize the kernel and only put in what you need to get the virtual environment up and running," Ward said.

Orecklin says because Microsoft's virtualization portfolio will extend from the desktop all the way to the data center, there will be opportunities for the vendor and its partners to build applications in between.

Microsoft holds a trump card of sorts with its System Center portfolio, which provides management for both physical and virtual assets, and monitors the health of virtual machines and applications, Orecklin said. "The more you virtualize, the more that management of the environment becomes important," he said.

One of the main areas of value that partners provide in virtualization are the strong customer relationships they have with customers, according to Orecklin. "As enterprises look at taking advantage of new technologies, they're going to look to trusted partners," he said.

Solution providers with skin in the virtualization game say they're making money from the integration and configuration services for virtual servers that are necessary for optimal performance, says Knijnenburg.

"We also make money on integrating Virtual Server into a SAN environment, which is one area where the product works very well. The physical host doesn't have to have a lot of disc space, just memory and processing power tied back to a SAN," Knijnenburg said.