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Microsoft Uses VMworld to Hype Its Hypervisor

When VMware (NYSE: VMW) invited archrivals Microsoft (NASDAQ: MSFT) and Citrix Systems (NASDAQ: CTXS) to VMworld 2008, its user conference being held in Las Vegas through Thursday, everyone was surprised. Sure, VMware is trying to show it's open, but being this open could be a recipe for trouble for the virtualization kingpin.

And that trouble was delivered by Mike Neil, Microsoft's virtualization strategist, in an interview with Microsoft PressPass on the show floor which was promptly posted on Microsoft's Web site.

"Virtualization is about more than the hypervisor; it's also about management software, and that's where vendors differentiate themselves," Neil said. He pointed to Microsoft's "comprehensive server virtualization and management solution" which costs "about a third of VMware's competing product" and, rubbing it in further, the fact that Microsoft's Hyper-V Server 2008 hypervisor will be available for no charge.

Microsoft's management solution is System Center Virtual Machine Manager (SCVMM), which manages both virtual and physical machines giving it an edge over VMware.

"SCVMM's being able to manage multiple hypervisor environments is a challenge to VMware," John Premus, chief strategy officer at virtualization professional services and consulting firm VIRTERA told InternetNews.com. "VMware's management platform isn't very robust and a lot of customers realize that."

Although VMware president and CEO Paul Maritz announced in his keynote speech Tuesday that VMware is integrating its management solutions into those from partners such as IBM (NYSE: IBM), that still leaves lots of opportunity for Microsoft because "that will address the top tier companies but a lot of mid-tier companies are already left out and they're already Microsoft customers," Premus said.

SCVM 2008 went into public beta in April, and will be available in 30 days.

The price issue

By mentioning that Hyper-V is free, Neil struck to the root of VMware's problem. "The biggest problem with VMware is their price, any customer will tell you," Alex Bakman, virtual appliance vendor VKernel's founder and CEO, told InternetNews.com. "People love their technology but their price is prohibitive."

Responding to the threat of competition from Microsoft, VMware recently unveiled ESXi, a free version of its ESX hypervisor, in July. However, this is a bare-bones hypervisor, and users will have to pay for management and other features. Microsoft was, at the time, charging $28 for the stand-alone version of its Hyper-V hypervisor, but on Sept. 8, it announced that Hyper-V would be available within 30 days as a free download.

In another swipe at VMware, Neil said that Microsoft's virtualization software integrates easily into most enterprises' IT environments because it runs on Windows and "customers have told us that training is faster and less expensive as a result."

Again, that's an area where VMware is losing ground. "A lot of companies are looking at Hyper-V as integrating with their internal skillsets and internal IT environments," VIRTERA's Premus said. "Even if they're VMware customers, they might look at possibly deploying Hyper-V for testing and development and managing that using SCVMM."

Updated to add information about Hyper-V pricing.