VMware, MS battle over virtualization management

"The enterprise is going to be very leery of Microsoft, but the on-ramp to VMware is a bit steep for small businesses. VMware doesn't want to lose that potential business, but the company was getting a bit drunk on enterprise dollars," says Thomas Bittman, Gartner vice president and distinguished analyst. "Microsoft could grab small businesses and grow up, and VMware should do anything it can do to get that market share, even if it costs revenue."

By packaging its hypervisor with a server release, Microsoft will gain access into many accounts -- except the adoption curve may mirror that of servers, which could hold Hyper-V back a bit, Bittman says. But overall industry watchers expect Hyper-V to take off with small customers.

"Any customer is liable to use Hyper-V. It is being packaged with Windows Server 2008, which makes it much easier to deploy than ESX Server," EMA's Mann says.

And once Hyper-V is in small shops, Microsoft will have the opportunity to sell its management capabilities and add-on products to those customers. "Microsoft has a history of coming in low and gaining market share," IDC's Elliot says.