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Microsoft's virtualization technology, long planned to be an integrated part of Windows Server 2008, will now be available as a standalone product as well. Is Microsoft bowing to customer needs, reacting to market pressures, or reading the regulation tea leaves? Some of each.

The software company revealed last week it will offer its hypervisor--code-named Viridian, and newly dubbed Hyper-V Server--as a standalone server. The list price: 28 bucks. That's not free like Citrix Systems' XenExpress, but discounts can be expected as OEMs bundle Hyper-V Server into their products. Dell, Fujitsu, Hewlett-Packard, IBM, and Lenovo are among the computer makers with plans to distribute it.

Hyper-V Server will have a small footprint, comprising the hypervisor and little else, akin to VMware's ESX Server. Hyper-V Server's job is to support the creation and management of one or more virtual machines on a server. "That gets particularly interesting for customers if they want to run virtualization on a machine that doesn't run Windows," says Microsoft server marketing VP Andy Lees. Microsoft is working with Novell on "bidirectional virtualization" between Windows and Novell's SUSE Linux/Xen combo.

Microsoft explains the decision to unbundle the hypervisor from Windows Server 2008 as giving customers more flexibility and choice, though it must be noted that Hyper-V will only come packaged with 64-bit versions of Windows Server 2008. It also could be viewed as a pre-emptive move to steer clear of antitrust sensitivities, especially in Europe, where regulators have levied a steep fine on Microsoft for bundling its Media Player with the desktop Windows operating system.

Competitors include Citrix, Virtual Iron Software, VMware, and most recently Oracle, all of which layer management software on top of their hypervisors. Microsoft last week released System Center Virtual Machine Manager 2007, its answer to other tools. Management could be the layer where Microsoft has an advantage. "System Center is a much broader infrastructure than [VMware's] Virtual Infrastructure," says Gartner analyst Thomas Bittman.

Hyper-V Server will ship within six months of Windows Server 2008, which is due in the first quarter of next year. It could be the second half of 2008 before Hyper-V Server ever gets to market. As IT departments move hurriedly toward virtualization, that would put Microsoft further behind VMware and others.

A second new feature, dynamic virtualization, lets packaged virtual applications invoke and share data with each other, saving on overhead. For example, a company that has developed multiple apps on top of Microsoft Access could virtualize them all separately and have them call a virtualized instance of Access. Previously, Access needed to be included in the virtualization package for each app developed on top of it. This could use a lot less memory space and bandwidth, but risks restoring some of the complexity that app virtualization is designed to overcome.

The Windows Server 2008 operating system will be available in standard, enterprise, and data center editions, as well as for Itanium-based servers and Web servers. Don't need Hyper-V? Versions without it will be $28 less.

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