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Citrix is to make its XenServer software free, from April. The company has also strengthened ties with Microsoft so that both companies can help keep pace with market leaderr VMware.

As part of the new agreement, Citrix plans to release a new suite of virtualisation management tools in April, called Citrix Essentials, that will be offered in two versions - one for Microsoft's Hyper-V software and another for Citrix XenServer.

Citrix has more advanced management tools than Microsoft for virtual environments, and Microsoft hopes the partnership will help spread the use of Hyper-V in data centeres. In return, Microsoft has pledged to manage XenServer  with the next version of its Systems Center management software, which currently works only with Hyper-V and VMware's ESX. It will also market and sell Citrix Essentials for Microsoft Hyper-V to its customers worldwide, the companies said.

In another move to counter VMware's lead, Citrix will offer its XenServer software free starting in April. One or two high-end features from that product, including the high-availability features, will be moved to Citrix Essentials for XenServer, but many of the existing capabilities will be available for no charge, said Citrix CTO Simon Crosby.

Citrix Essentials for Hyper-V and Citrix Essentials for XenServer each will be priced at US$1,500(£1,030) to $5,000(£3,440) per server, depending on the features selected, Crosby said.

"What this is really about is Microsoft and Citrix as a team going against VMware," said Mark Bowker, an analyst with Enterprise Strategy Group.

The tools in Citrix Essentials include StorageLink, for provisioning and managing virtual machines across large storage area networks; dynamic provisioning, which allows thousands of virtual machines to be booted simultaneously from a single master image; and a new "lab management" tool for creating virtualised test and development environments. It will also have a graphical tool for automating a workflow of complex management tasks.

The version of Essentials for XenServer will include the high-availability features that are currently in the Platinum edition of XenSource 5. Those features will not be in the version for Hyper-V.

"Citrix Essentials for Hyper-V is a much-needed step, especially for Microsoft," according to Chris Wolf, a senior analyst with Burton Group.

The storage and provisioning capabilities will be a boost for Microsoft, although the lack of a high-availability option will make some enterprises hesitant about using Hyper-V for production applications, Wolf said. At least initially, he expects the Microsoft platform to be more widely used for virtual test and development environments.

The cross-management capabilities between Hyper-V and XenSource will also give Citrix a boost, Wolf said. Customers could deploy XenServer now, with the knowledge that they can adopt Hyper-V later and manage both from Microsoft Systems Center, he said.

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 centres.

"A lot of large enterprises have mature VMware deployments; they're a bit cautious about splitting their infrastructure across multiple hypervisors." Wolf said, adding these 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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