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BOSTON -- Microsoft today announced that it will give away its Virtual Server R2 for free, a move seen as reflecting the furiously competitive virtualization software market. This is Microsoft's second price cut for its flagship virtualization product, which can host multiple virtual machines running either Linux or Windows.

Virtual Server 2005 originally cost $999 and $499 for the Enterprise and Standard editions, respectively, when released in September 2004. Microsoft then released Virtual Server R2 at $199 and $99 for the Enterprise and Standard editions, respectively, in December.

Longtime virtualization market leader VMware, which already had a free product called VMware Player, responded in February by making its GSX Server free. Meanwhile, Linux-based vendors such as XenSource and Virtual Iron Software are readying new or updated versions of their virtualization software.

VMware also announced that its similar but competing virtual machine disk-format specification will be available to all developers and vendors without charge, restriction, or license.

Tactical Move

With Monday's change, announced at the LinuxWorld conference here this week, Microsoft is eliminating the Standard edition and making its Enterprise edition available for download at no charge.

Zane Adam, director of product marketing for the Windows Server division, acknowledged that the move is partly a tactical reaction to other vendors' moves. "But even before R2 arrived, we were already signaling this was the direction we were going in," he said.

Microsoft entered the virtualization market in 2003 when it bought Virtual PC for the Macintosh and the then-unreleased Virtual Server from Connectix. It claims 5000 customers for all versions of Virtual Server, with a total of 700,000 downloads of the product. Adam declined to speculate on how many users Microsoft hopes to gain by making the software free.

Support Services

Microsoft has itself played a role in the rapid commoditization of the virtualization software market. A year ago, it said it would fold a hypervisor--software that manages virtual machines--into release 2 of the upcoming Longhorn Windows Server, which is expected around 2009.

"We think that virtualization will eventually be just like having wheels on your car; it's just going to be there," Adam said.

Microsoft also released add-ins to allow current and past enterprise and standard versions of both Red Hat Linux and Novell's SUSE Linux to run on top of Virtual Server as guest operating systems. The company will also offer 24-hour technical support for Linux applications and guest operating systems running on Virtual Server.

Microsoft said that it has signed up 45 vendors as licensees of its freely available Virtual Hard Disk (VHD) format. Licensees, including Brocade Communications Systems. BMC Software, Network Appliance, and XenSource, are making their applications interoperable with VHD, and thus Virtual Server.

Much of the marketing by Linux-based virtualization vendors such as XenSource and Virtual Iron touts their products' faster speed and greater efficiency over VMware. Microsoft's Adam says that such speed claims won't impress customers in the future.

"We saw it in the processor wars. A split-second-faster response time is not what's important," Adam said. "Everyone's going to have a hypervisor that runs at similar speeds. But the customer is already moving away from speeds and feeds. It will be about the ecosystem and the partners you have."