Microsoft head Steve Ballmer has promised to add Linux support for the first time in one of its products because, he explained, users need to manage heterogeneous networks.

Support for the software giant's open-source rival and greatest threat will come in Virtual Server 2005 Service Pack 1, due to ship by the end of the year, Ballmer said as part of his keynote speech at the company’s annual summit.

"We will add support for non-Windows virtual machines running on our Virtual Server, including Linux," he said. "Virtualisation is an area of intense interest and activity for us. Driving virtualisation is a key technology to facilitate better compatibility and lower total cost of ownership."

Ballmer also said Microsoft would use its Dynamic Systems Initiative to become an "enterprise management vendor" and deliver tools that let users extract management intelligence from their network nodes regardless of vendor.

He also joked about his "no-show" at last year’s Management Summit, when he had to cancel his keynote after being called away to meet with the European Union, which eventually fined the company $613 million.

But the emphasis was on Virtual Server 2005, first introduced late last year. Ballmer said the server would support third-party operating systems running on top of Virtual Server when Service Pack 1 is released. Previously, users could run other operating systems within Virtual Server 2005, but Microsoft did not provide support for the configuration.

Ballmer also said Microsoft was adding other virtualization improvements, including support for x64 editions of Windows Server 2003, and a Microsoft Operations Manager management pack for Virtual Server that provides a central console. Microsoft plans to license, royalty-free, its Virtual Hard Disk (.vhd) file format in an effort to jump start industry acceptance of its virtualisation technology.

"They can’t compete against VMware [from EMC] without support for other operating systems," said Nelson Ruest, a consultant with Resolutions Enterprises. Ruest said Microsoft is taking the right steps because most users view Virtual Server today as a platform for non-mission-critical tasks such as test environments. He also said VMware has a superior management console that Microsoft will have to work hard to match.

Ballmer said Microsoft would add other critical features around the time the company releases Longhorn Server in 2007, but said those features will not come with Longhorn.

Most important will be support for Hypervisor, an optimised OS, or microkernel, built into the virtualisation platform that provides better performance and scalability. Experts say Hypervisor is key for virtualisation because it shields the host operating system from security attacks. Virtualization vendors VMware and SW-Soft both support Hypervisor.

Ballmer also said the forthcoming release of Windows Server, codenamed R2, would provide support for WS-Management, a Web services protocol the company is working on with Sun, AMD, Dell, BMC and others. The protocol will support inter-operability, and he showed a demo using Microsoft Operations Manager to troubleshoot problems on Sun servers, one running the Windows OS and the other Solaris.

"We are showing you for the first time ever the use of XML and WS-Management to get stronger inter-operability from a management perspective," Ballmer said. He said the work would be part of a "State of the Union" announcement he and Sun CEO Scott McNealy will make in a few weeks regarding last year’s historic agreement the companies made to work together.