Earlier this week Microsoft released Systems Center Virtual Machine Manager 2007, which is a first attempt to compete against the virtualization software from VMware.
he move is considered one of Microsoft's first major efforts to cut into the lead held by VMware--which went public this summer in the hottest technology IPO in years--and thus undercut a potential threat to Windows server software.
"The sleeping beast has awoken," said Stephen Elliot, research director at IDC. "Microsoft's been a little slow to the game."
Windows accounts for about two-thirds of the market for computer-server operating systems, by shipments, but Microsoft is considered a laggard in virtualization to allow servers to run Linux or Unix operating systems alongside its own software.
Virtualization is one of the fastest-growing segments of the technology industry since it enables technology departments to use servers more efficiently, cutting the need for machines and reducing electricity costs.
It also allows companies more flexibility on how data centers are managed and simplifies the implementation of new software applications.
VMware, an affiliate of data storage firm EMC Corp, holds more than 70 percent of the virtualization market and its sales have doubled year-on-year for the past several quarters.