What a new Microsoft-Citrix partnership means

ESG virtualization guru Mark Bowker is keeping me abreast of the goings-on at VMworld Europe in Cannes. In between the merlot and brie, Microsoft and Citrix announced an interesting and potentially lucrative partnership for server virtualization and virtualization management dubbed "Project Encore."

Here's the deal. In spite of its recent release of Hyper-V, Microsoft remains behind VMware in terms of enterprise management features. To bridge this gap, Microsoft is teaming with Citrix to offer advanced server virtualization management through Citrix Essentials. Citrix Essentials builds on Hyper-V with management capabilities for storage management, physical/virtual server provisioning, and lab management automation. Both companies will offer Citrix Essentials through their channels.

The benefits of this partnership could be immediate and profound:

• Microsoft closes the functionality gap with VMware and can thus focus on getting its hypervisor installed everywhere. The goal? Make Hyper-V the Windows of hypervisors.

• Citrix follows Microsoft with advanced management capabilities that are tightly linked to its products. Citrix Essentials goes beyond Hyper-V support to provide some cool orchestration capabilities for XenServer, XenApp, and XenDesktop as well.

So does this mean that Citrix has given up on its own hypervisor? Not at all. In fact, Citrix just announced an aggressive program of its own to give away XenServer with central management and live motion support. Obviously, Citrix wants to build a beachhead of its own.

VMware is still the enterprise incumbent but this announcement may add pricing and margin pressure immediately. With the stock market and consumer confidence in the toilet, it is hard to argue with Windows economics and free hypervisors.