At the Microsoft Tech Ed 2006 trade show in Boston last month, I was lucky enough to sit down with VMware President Diane Greene, who was in town briefly to speak at an unrelated industry event. VMware, she told me, had just celebrated the release of its latest virtualization product, VMware Infrastructure 3, and had marked the occasion with a look back at more than eight years of evangelizing virtualization. "That job is done," she said. "Now it's about explaining the value of virtualization to companies."

From what I can tell, many people in the IT world are finally coming around to the notion that virtualization can play a valuable role in their environments. Greene told me that in the latest quarterly Goldman Sachs survey of CIOs, VMware was among the top five companies CIOs planned to spend money on in the last six quarters. Last quarter, VMware was number one.

Still, I asked Greene, doesn't VMware feel the heat fromMicrosoft? More to the point, doesn't VMware believe that Microsoft is abusing its OS monopoly by bundling virtualization technologies in a future version of Windows? "The courts are not the place to decide the market," she countered. "Customers will choose virtualization solutions based on quality, price, and features."

In addition to its technical advantages over Microsoft, VMware does have an ace up its sleeve. Greene and her company are calling on the industry to standardize a virtual hard drive format that all future virtualization solutions should use. "Microsoft's VHD format is free now, but you have to license it," she said. "That's a big problem for the industry. Companies don't want a closed system with arbitrary licensing. Microsoft is artificially keeping VHD proprietary." VMware's virtual hard disk format, and the products it creates around it, isn't tied to a particular OS platform, as are Microsoft's solutions.

Because of VMware's extensive experience with virtualization--a key reason its technologies are more advanced and capable than Microsoft's virtualization products--Greene says that the company has a better grip on where virtualization is going in the market. It's not about virtual environments any more, in which a customer runs Windows or Linux in a software sandbox. Instead, virtualization is moving toward application appliances. "It's about the appliance, not the OS," Greene explained. "Microsoft is just tying its Hypervisor technology to the OS and to the underlying hardware required to run Windows."

VMware's technologies, meanwhile, have moved forward to embrace the capabilities enterprises will need to manage and optimize their virtualized applications, wherever and however they're created. The company offers an extensive set of products that can help businesses get the most of virtualization, regardless of how they choose to use it. In other words, VMware is well past the stage of just figuring out virtualization. They're working to make sure these technologies are as useful as possible to customers. Microsoft, one might argue, is simply doing what it always does--integrating something useful into Windows and seeing what happens.

As an aside, Greene touched on one issue I'd always figured was an unheralded benefit of virtualization: a massive reduction in power consumption, which is often the greatest cost associated with any datacenter. By consolidating legacy servers and applications into virtual machines, you're able to reduce the number of servers you need. That in turn, reduces management costs, but also the power and cooling costs required for keeping the datacenter up and running. And these costs can be substantial, as any IT manager is well aware, so the savings speak right to the heart and mind of any number cruncher. Talk about a fringe benefit.

A Few Other Notes I should also make note of the fact that Microsoft finalized ISA Server 2006 this week and slightly delayed the general availability of Windows Small Business Server (SBS) 2003 R2 until September, the latter due to a problem found in the final shipping code. Because customers weren't going to get SBS 2003 R2 until late this month anyway, no customers were affected by the code recall.