However, both vendors still face a formidable challenge in VMware, Bowker and Wolf said. VMware retains a technology lead in server virtualisation, and it has an established presence in many data centers.
"A lot of large enterprises have mature VMware deployments; they're a bit cautious about splitting their infrastructure across multiple hypervisors." Wolf said, adding that Monday's announcements may have the most impact for small and midsize businesses.
Microsoft and Citrix both said they have a price advantage that makes them competitive with VMware. Customers would have to pay VMware $5,000 per server to get the functionality offered in the free XenServer, according to Crosby. However, VMware's Infrastructure 3 software does include features that XenServer will not have.
Microsoft wants to make virtualisation part of the Windows platform, just as networking capabilities are a part of Windows today, said David Greschler, Microsoft's director of Systems Center marketing. The fact that companies are familiar with Windows lowers their training costs, he argued. "When they know Windows, they know virtualisation."
Both companies see plenty of room for growth in the market.
"Today we're seeing [virtualisation] at about 20 to 30 percent penetration," Greschler said, "but we expect that to grow very fast, and it will be in the upper 80 to 90 percent range very quickly."
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