In the first major Windows Server announcement since its worldwide partner conference in July, Microsoft (NSDQ:MSFT) offered a substantive look into its server virtualization and pricing strategy.

Monday at the TechEd IT Forum in Barcelona, Microsoft announced that its widely awaited server virtualization technology, previously code-named Viridian, will hereafter be known as Hyper-V.

Microsoft also unveiled plans to offer 8 different SKUs for Windows 2008, three of which will ship with Hyper V:

• Windows Server 2008 includes one virtual instance per license and sells for $999 (with 5 Client Access Licenses).
• Windows Server 2008 Enterprise includes four virtual instances per license and sells for $3,999 with 25 CALs.
• Windows Server 2008 Datacenter includes unlimited virtual instances per license and sells for $2,999 per processor.

Microsoft, which is also selling Hyper V as a $28 standalone offering for Linux and Unix machines, will ship a beta version of Hyper V along with Windows Server 2008.

Then, in the second half of next year Microsoft will push out the final version of Hyper V through Windows Update, said Andy Lees, corporate vice president for Microsoft's Server and Tools Marketing and Solutions group.

"Like any beta technology, we don't recommend using Hyper V in production until the final bits are released," said Lees.

Lees noted that Microsoft used the same approach with the release of clustering technology in SQL Server 2005. "Releasing a non-production copy in the SQL 2005 release worked out well because we were able to gather feedback, and then the final bits were of an even higher quality," Lees said.

While previous Microsoft announcements of new product versions and licensing have been somewhat confusing, the vendor has been pretty clear about its server virtualization intentions, says Rand Morimoto, president of Convergent Computing, an Oakland, Calif.-based Microsoft Gold partner.

Microsoft also announced the general availability of System Center Configuration Manager 2007, System Center Data Protection Manager 2007 and System Center Virtual Machine Manager 2007, all of which provide important management functions for server virtualization.

"From a management standpoint, it's important to have a top-to-bottom view of the entire virtualization infrastructure," said Lees.

On Monday VMWare announced the release of VMware Fusion 1.1, an update to its "virtual machine" software for Intel-based Macs. A free update for registered users, VMware Fusion costs $79.99.

Fusion enables Intel-based Mac users to run other X86-based operating systems like Windows and Linux at the same time as they're running Mac OS X; the software operates the other operating systems as "virtual machines" running simultaneously with the host operating system.

The 1.1 update adds official support for Mac OS X v10.5 "Leopard," and further improves 3D graphics support, with experimental support for DirectX 9.0. Unity, which lets users minimize Windows applications to the Mac OS X Dock, switch between Mac and Windows apps using Exposi and more, has also been improved. Support has been added for Vista Boot Camp partitions as virtual machines, and the software has been localized for French, German and Japanese. Performance has been improved as well.

VMware has also introduced VMware Importer, a new beta application that lets Fusion users import virtual machines created using VMware Fusion's principal Mac rival, Parallels Desktop. You can download it from the "Drivers & Tools" tab on the VMware Fusion 1.1 download page.

One of the most complex issues when dealing with virtualization is not technical: current Windows licensing scheme has not been developed with virtualization in mind, so that understanding to what and when license applies in a virtual datacenter is very vague at this point.

In October 2005 Microsoft modified its OS licensing terms so that Windows Server 2003 Enterprise Edition license allows up to 4 virtual OS instances, while the Datacenter Edition license allows unlimited virtual instances. With any virtualization platform, not just Virtual Server 2005. And announced codename Longhorn (rumored Windows Server 2007) will follow this policy.

This move doesn't completely clarify things, letting customers confused when handling back-end servers licensing schemes (which are different from Windows one), or different virtualization approaches, like SWsoft Virtuozzo.

To partially address questions Microsoft just released a neat online calculator, showing diffences in price between Windows editions (Standard, Enterprise and DataCenter) in a virtualization scenario, with multiple physical server and different CPUs configurations: the Windows Virtualization Calculator.

Let's hope this tool can be improved to consider more complex scenarios, where also back-end servers licenses can be calculated.

VMware Inc. said Monday it will release three software packages by the end of the year to help small and medium-size businesses take on virtualization projects.

The packages, which VMware calls "acceleration kits," are based on VMware Infrastructure 3, its virtualization suite for servers and storage networks. VMware, a subsidiary of EMC Corp., said between 60 to 70 percent of its customers are SMBs.

The packages offer varying levels of features depending on price. At the core of all three is either VMware's ESX Server or ESX Server 3i, a product released last month whose hypervisor is embedded in flash memory in the server hardware. The hypervisor enables multiple OSes to run on one machine.

VMware hopes the ESX Server 3i, which the company says has a small, 32M-byte footprint and is easy to use, will keep it ahead of competitors such as XenSource, which was bought by Citrix Systems Inc. in August for US$500 million, and Microsoft Corp.'s Viridian project. VMware holds more than 80 percent of the market for virtualization products.

Also in the acceleration kits are tools such as an Update Manager, which handles patch management, and Guided Consolidation, a tool to shift tasks from physical servers to virtual machines. The company published a full list of features of the three VMware acceleration kits on its Web site.

The cheapest kit, called Infrastructure 3 Foundation, is priced at US$2,995 for three two-processor licenses. The Infrastructure 3 Standard High Availability kit lists for $5,995, for two, two-processor nodes. The Infrastructure 3 Midsize Acceleration Kit accommodates three, two-processor nodes and sells for $14,495.

VMware is launching a new, embedded version of its flagship ESX Server hypervisor, along with a disaster recovery tool and an update for its virtual desktop broker.

The so-called thin hypervisor, named ESX Server 3i, will be integrated in servers from Dell, IBM, and HP, according to VMware, with unnamed others to follow. The plan is that building virtualisation into the hardware simplifies deployment and management of virtual infrastructure, because it removes the installation step.

ESX Server 3i partitions a physical server into multiple secure and portable virtual machines said VMware. The vendor claimed that users will have the hypervisor up and running "in a matter of minutes". According to Tommy Armstrong, VMware's European marketing manager , 3i allows a company use their preferred hardware OEM and, once booted, the server asks for the admin password and IP address, and is ready to run virtual machines.

VMware claimed that 3i was "the only hypervisor on the market today that does not incorporate a general-purpose operating system, thus freeing it from the many challenges involved in maintaining a general purpose OS." 3i occupies only 32MB because VMware has removed the OS without affecting the functionality of the hypervisor. VMware reckoned it achieved this by removing the service console, which Armstrong reckoned reduced the footprint by 98 percent. Instead of managing the system locally, it can be accessed via VirtualCenter, VMware's management tool for virtualised infrastructure.

As well as simplicity, VMware's claimed that the benefits of this approach include reliability and security.

“Today, VMware is ushering in a new era where virtualisation is not separate from hardware, it is simply how industry-standard servers operate,” said marketing manager Raghu Raghuram. ”We have worked with our partners to integrate ESX Server directly into their hardware. Now customers can turn on their servers and boot directly into a fully-functioning hypervisor to rapidly and easily realise the benefits of virtualisation. We expect this advance to simplify virtualisation and make it accessible to customers of all sises.”

According to the company, users can deploy VMware's Infrastructure 3 (VI3) products on top of 3i, including VirtualCenter, VMotion, Distributed Resource Scheduler (DRS), High Availability (HA), and VMware Consolidated Backup.

Hardware vendors are expected to begin shipping ESX Server 3i within their products by the end of 2007 and over the course of 2008. IBM has already pre-announced such a device.