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BOSTON - Microsoft has begun public trials of new virtualisation software that will compete head-on with programs from VMware Inc, saying the tests are starting ahead of schedule.
Shares in VMware, the world's fourth-largest publicly traded software maker, fell as much as 7 per cent and Microsoft shares rose as much as 2.8 per cent after Microsoft's announcement that it has released the trial software, known as Hyper-V.
Microsoft said it previously told customers the first public release of the test version of Hyper-V would come out in the first quarter of next year.
Global Equities Research analyst Trip Chowdhry said the release of the trial versions of the Microsoft virtualisation programs, which come on the heels of Oracle Corp's unexpected entry last month into the market for virtualisation software, is bad news for VMware.
Chowdhry said that engineers at Microsoft have told him Microsoft's virtualisation programs are three times as efficient as those from VMware, which is based in Palo Alto, California. Oracle has publicly made a similar claim.
Officials with VMware, which went public in August in the hottest technology initial public offering in recent years, could not immediately be reached for comment.
In afternoon trade, VMware stock was down 4.3 per cent, or US$4.25, at $94.98 on the New York Stock Exchange, but it remained far above its IPO price of $29 a share.
EMC Corp, which owns a majority stake of 86 per cent in VMware, fell as much as 4.2 per cent and was off 3.4 per cent, or 67 cents, at $19.01 in afternoon trade.
Typically, server computers run one operating system that might utilise 10 or 15 per cent of its power. A server using VMware software can simultaneously run five to 10 or more operating systems. Each of these systems becomes a virtual machine working as an independent server.
VMware says that companies can save about $600 per year and 7,000 kilowatt hours in electricity for every software application put onto a virtual machine.
Each server removed through virtualisation saves 12.5 tons of carbon dioxide emissions, which is equivalent to taking 1.5 cars off the road, according to VMware.
VMware's shares hit a record $125.25 on October 31, on expectations that the software maker's technology was one or two years ahead of its closest competitors'.
Microsoft plans to incorporate virtualisation software in the first major upgrade to its business operating system for server computers, Windows Server 2008, to be released next year.
The world's largest software maker has reported multiple delays in completing the virtualisation component of Windows Server 2008, which had led some investors to doubt whether it would be able to start public trials of the software in the first quarter of next year.
- REUTERS
