Microsoft arrived late to the virtualization market and still has holes in its product portfolio. As it fights for market share, partners say Microsoft's traditional strategy of pricing competitors out of the market will be tested like never before. The rapid acceleration of the virtualization market was recently underscored by VMware's strong $1.1 billion initial public offering and Citrix Systems' pending $500 million acquisition of open source virtualization vendor XenSource, expected to close in the fourth quarter.
Microsoft, which partners with Citrix, currently offers Virtual PC and Virtual Server 2005 for desktop and entry-level server virtualization; SoftGrid for application virtualization; and terminal services for the presentation level. What Microsoft doesn't have right now is a server virtualization product to compete with popular offerings such as VMware's ESX Server. That product, the Viridian hypervisor, is slated to arrive in the second half of next year, although Microsoft has already delayed the beta release.