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VMware Vilifies Microsoft in Virtualization

VMware isn't taking Microsoft's  entrance into its bread-and-butter virtualization market in stride.

The EMC  subsidiary presented the case that Microsoft's virtualization licensing and distribution schemes restrict customer and vendor choice to the point of being anti-competitive.

In a white paper issued last Friday, VMware said Microsoft is trying to impinge customers' freedom to "choose virtualization software by limiting who can run their software and how they can run it."

Mike Neil, Microsoft's general manager of virtualization, said in a statement that VMware's report contains several inaccuracies and misunderstandings of Microsoft's license and use policies, support policy and commitment to technology collaboration.

VMware's argument is that the Redmond, Wash., software power uses its dominant Windows operating system market share to steer customers toward its own virtualization products, such as Virtual Server 2005.

VMware makes these claims even though it dominates the virtualization software market, thanks to the way it has been able to get multiple copies of Windows running on one physical server.

The software provider filed for an IPO earlier this month after another stellar quarter in which it grew revenues 101 percent year-over-year to $232 million. For 2006, VMware watched sales grow 83 percent to $709 million.

Yet VMware's complaints span a number of different areas with regard to the way Microsoft sells and distributes its Virtual Server and Virtual PC software.

VMware said that for customers who purchase VMware products but do not have a Premier-level support agreement, Microsoft support specialists may request that customers first replicate the issue on a physical machine.

The EMC company also said that Microsoft has begun to publish restrictive terms on the use of published virtual machines. Specifically, Microsoft restricts use of their VHD-formatted virtual machines to MS Virtual Server and/or Virtual PC only.

Other issues irking VMware are that Microsoft's licensing policies ask for permanent assignment of operating system licenses to hardware; that Microsoft allows customers to move a desktop operating system from one system to another only if it is uninstalled on the previous system; and that Microsoft is not permitting use of the Longhorn APIs by other virtualization vendors except for Novell.

VMware's conclusion is that Microsoft needs to accommodate market choice and interoperability.

"Customers require freedom of choice to implement both Microsoft and non-Microsoft applications running on Windows with any chosen system virtualization layer," VMware said in the report. "Customers do not benefit from being forced into a homogenous virtualization/OS/application stack."

Microsoft's Neil disagreed.

"We believe that we are being progressive and fair with our existing licensing and use policies and creating a level playing field for partners and customers," Neil said.

"To encourage interoperability, we openly share technology and have published a set of APIs for all our commercially available virtualization products today and provided documentation on APIs for the hypervisor that will be part of the next version of Windows Server, code-named Longhorn."

Neil added that Microsoft hopes to work with VMware to clear up any misunderstanding with regard to the points raised in the white paper.

The issue is the latest example of a company challenging Microsoft because the vendor entered its market.

While Microsoft enjoys virtualization relationships with Novell  and XenSource, companies continue to claim the software giant is not doing enough to promote interoperability and open relationships.

Pund-IT analyst Charles King said VMware's paper is an attempt to control the messaging in the virtualization market, which has gotten increasingly competitive with the emergence of the open source Xen hypervisor, SWSoft and Virtual Iron.

Microsoft, Xen and others have solid technology but are years behind the curve that VMware has set up in terms of product functionality and product quality, King noted. Yet Microsoft has unlimited financial resources and potential.

"It's kind of a dance of the elephants."

King said he doesn't anticipate VMware's argument will impact Microsoft's virtualization strategy unless customers take issue with the licensing and distribution schemes.