But rivals such as VMware and analysts are claiming that the company is too far behind to catch up anytime soon.
"The market is moving ahead of the basic hypervisor now," said Raghu Raghuram, vice president of data center and desktop platform products for VMware, in Palo Alto, Calif.
Server virtualization will be a key theme for Microsoft during the WinHEC conference in Seattle beginning May 22. In addition, chip maker Intel will discuss its hardware-based virtualization feature, which it is incorporating this year throughout its processor lines.
Microsoft officials dismissed suggestions that theyre running behind.
Jim Ni, group product manager for server virtualization marketing at Microsoft, in Redmond, Wash., said the company is meeting the current demand from customers with the new capabilities within Virtual Server 2005 Enterprise Edition, and that the hypervisor technology will be arriving just as businesses begin to ramp up their use of virtualization in production.
Ni said that while numbers show a growing number of businesses are using virtualization in production now, its "not pervasive for the most part."
Users can create virtual environments in Windows deployments now and will be able to migrate those environments when Viridian is released, Ni said. The hypervisor will come out after the release of Longhorn, the next version Windows server, which is due in the second half of 2007.
Until then, Virtual Server will meet users needs, Ni said. Since announcing the free download of VS R2 in April, Microsoft has seen it downloaded more than 200,000 times, Ni said. In addition, there have been more than 10,000 downloads of the Linux add-ins, designed to make it easier to run Linux in a virtual machine environment on VS R2.
Microsofts push with Virtual Server 2005 has worked to some degree. According to a survey released in February by Forrester Research, in Cambridge, Mass., between 2004 and 2005, users considering Microsoft for virtualization jumped from 5 percent to 20 percent in North America, and Microsoft now beats VMware for consideration in Europe, the survey found.
However, one industry observer said Microsofts virtualization initiative has put the company far behind others, particularly VMware and vendors like Virtual Iron and SWsoft, which are looking to the open-source Xen 3.0 hypervisor as their basic building block.
In addition, Linux vendors Red Hat and Novell are baking Xen into their distributions.
The problem for Microsoft is that by the time Viridian is released, the industry may well be past wanting or needing another x86 hypervisor tied to an operating system, said Gordon Haff, an analyst with Illuminata, in Nashua, N.H. "Theyre pretty far behind," Haff said. "There already is a mature product in the market with VMware, and while Xen isnt as mature, its moving in that direction."
Another problem for Microsoft, Haff said, is that as the basic hypervisor becomes less of a money-making technology for vendors—Xen is free, and VMware is offering VMware Server for free—revenue will come from management features that can be built on top of it. Without a hypervisor technology for the next couple of years, Microsoft may lose out on the chance to earn money on such features.
"They are a big company to be missing this," Haff said.