(VMW - Cramer's Take - Stockpickr) stock was rising more than 5% early Tuesday after the virtualization-software seller unveiled VMware Server 2, the next generation version of its virtualization product.
VMware Server 2 enables users to set up new server capacity by partitioning a physical server into multiple virtual machines. The idea is to help businesses make better use of and simplify their information technology assets.
Shares of VMware were up $4.02 at $84.38 in premarket trading.
The company said a beta version of VMware Server 2 for Linux and Windows is available for download from its Web site.
Microsoft Monday tweaked its virtualization strategy by unveiling a stand-alone virtualization server that won't require users to run the Windows Server 2008 operating system.
The announcement came at the company's annual TechEd IT Forum conference in Barcelona, Spain, where Microsoft also outlined pricing, packaging and licensing for Windows Server 2008 and the availability of management tools that address needs of virtualized environments.
Microsoft's virtualization announcement, however, is just a placeholder since the technology likely won't be available until August 2008. Microsoft's Hyper-V technology, formerly code-named Viridian and Windows Server Virtualization, will ship no more than 180 days following the release of Windows Server 2008, which is now slated between Jan. 1 and March 31, 2008.
Microsoft's stand-alone hypervisor technology is called Hyper-V Server. It is hypervisor virtualization technology that is installed on the "bare metal" of a hardware platform without the need for a Windows operating system.
In fact, the Hyper-V Server could be the only piece of Microsoft technology running on the hardware given that Hyper-V supports virtual machines running operating system other than Windows, including Linux.
Microsoft rival VMWare has an enterprise-focused virtualization product it currently ships called ESX that also installs on bare metal.
Microsoft has been marketing virtualization as a feature of the operating system, but critics say the company is bending to the reality that OEMs will likely include a hypervisor virtualization layer as part of their hardware.
Dell, Fujitsu Siemens Computers, Fujitsu, Hitachi, HP, IBM, Lenovo, NEC and Unisys have all signed up to include Microsoft's Hyper-V server on their platforms.
Microsoft, however, also plans to sell Hyper-V directly to corporate users who could wipe a server clean and install Hyper-V Server, which is priced at $28 and allows an unlimited number of virtual machines on a single box.
"Microsoft had clearly been very much in the hypervisor-virtualization-is-a-feature-of-the-operating-system camp," says Gordon Haff, an analyst with Illuminata. "I don't think Microsoft would phrase it this way, but clearly this is a step back from you can only get virtualization in the OS."
For its part, Microsoft says Hyper-V Server recognizes the fact that all hardware in essence will be a virtualization appliance.
"What we are trying to do enable customers to live in world where they treat all compute resources -- such as CPU cycles, storage, networking -- as a single blob while providing a consistent way of maximizing effectiveness and utilization while reducing costs for IT and making things more automated for IT," says Andy Lees, corporate vice president in Microsoft's server and tools marketing and solutions group. "And virtualization is the key piece of technology to enable that."
Haff says Microsoft's strategy shift isn't a negative, just a realization of where the technology seems to be headed.
"I think the general direction is going to be that the base hypervisor virtualization is going to be feature of the server rather than the [operating system]," he says " People like Dell and HP are going to embedded a hypervisor in the server, and in my view, it is not a big jump from there to say that in the not too distant future virtualization is just something that comes with the server like BIOS."
In addition to VMWare, others offer hypervisor technology that can install on bare metal including XenSource, which was recently bought by Citrix. Novell and Red Hat are also offering hypervisor technology with their operating systems.
Microsoft has existing partnership deals with both Novell and XenSource around virtualization integration.
But rival VMWare says Microsoft is sending a mixed message.
"Their product architecture is that virtualization is part of the [operating system] so they seem to be rethinking what hypervisor should be," says Raghu Raghuram, vice president of products and solutions for VMWare. "They are going to be coming out in almost one year with a basic-function hypervisor where today we have a robust hypervisor and 20,000 customers." And Raghuram adds WMWare comes with benefits such as availability and various management tools.
Haff says that speaks to what is truly interesting with virtualization, which are the tools needed to run and maintain a virtualized environment, especially requirements around management, and the fact that virtualized environments force IT to think about other parts of the network including storage, VLans, load balancing, SSL acceleration and firewalls.
"It's not about server virtualization," Forrester analyst Frank Gillett told Network World in August, "It's about when I have virtual servers I can completely change how I think about IT infrastructure. When I move virtual servers around I have to have storage that is not only networked but flexible so when I move the virtual server the storage connections go with it."
To that end, Microsoft Monday announced the availability of three of its System Center tools, including Virtual Machine Manager to manage virtualized servers.
The other tools are System Center Configuration Manager 2007, for client and server deployment and update, and System Center Data Protection Manager 2007, for backup and data recovery.
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