VMware may have the market share and, with its recent successful IPO, all the momentum.

But the server virtualisation leader lacks one thing that second banana Microsoft has as of Thursday: a system management platform that gives IT administrators a single simultaneous view of their physical and virtual servers.

That's key, say analysts, as users realise that implementing virtualisation tactically to save money can - without proper management tools to aid them - create a confusing infrastructure mess.

"It's just like when client-server computing got hot two decades ago," said IDC analyst Stephen Elliot. "There's no need to repeat that mistake again."

As the name of Microsoft's new release implies, System Center Virtual Machine Manager 2007 works closely with Microsoft's other management and provisioning products, such as System Center Configuration Manager (formerly Systems Management Server, or SMS) and System Center Operations Manager (formerly Microsoft Operations Manager, or MOM).

For instance, through its integration with MOM, VMM users such as RackForce Networks sysadmin James Bothe can get a quick snapshot rating of each physical server based on a combination of factors. Those include parameters such as CPU utilisation, RAM usage, and hard drive space.

That information gives Bothe quick insight into how many more virtual machines he can deploy onto a given physical host, and what kind. "It's a unique and nice feature," Bothe said.

RackForce has been testing VMM since the first round of beta. The hosting provider plans to use VMM to manage its 600-plus Windows servers - it has another 1,800 Linux servers - that each host 4-6 virtual machines created by Microsoft Virtual Server 2005.

VMM "is really easy to use.... I don't have to log into 10-15 servers a day anymore. I can just log into one and run everything from there," said Bothe, who has worked with many Linux management tools in the past, though not VMware's VirtualCenter (that company's counterpart to VMM).

VirtualCenter 2.0, VMware's latest edition, does not help administrators manage physical servers. Instead, VMWare has released a software development kit that allows other systems management software providers such as HP's OpenView or IBM's Tivoli or Director to pull data from VirtualCenter in order to manage both physical and virtual servers from their console.

But Elliott says that VMM sales will benefit from Microsoft's large base of SMS and MOM users, in addition to the technical benefits it enjoys from being part of the same family of products.

VirtualCenter manages only virtual instances created by VMware software. That's likewise true for Microsoft-created virtual machines and VMM, formerly codenamed 'Carmine,' today.

However, Microsoft says it already has in the works a version of VMM that will be able to manage virtual guests created by VMware or Xen (best known for creating Linux VMs) in addition to Microsoft-created virtual machines.

Beta one of that product is promised for release in the first quarter next year.

Took a licking and...

Microsoft has taken many licks this year in virtualisation, having been forced to delay features and product releases multiple times.

But with VMM, Redmond came out swinging. Not only did it announce the application's release just days before VMware's VMWorld show in San Francisco next week, but Microsoft also heavily undercut VMware on price.

A Workgroup edition of VMM available in January will cost $499 per physical server, with an unlimited number of VMs on top. Because it is aimed at small to mid-size businesses, companies are allowed to buy only five copies.

By contrast, single licences of VirtualCentre cost about $5,000 each.

Microsoft is also offering a bundle that includes 2007 versions of VMM, Configuration Manager, Operations Manager, and another new product, Data Protection Manager, for $860 per server plus a subscription to Software Assurance that adds an additional $215 - 25 percent per year. Small companies can buy SA contracts as short as two years. Enterprises can choose the length, typically between 2-4 years.

By contrast, VMware's equivalent bundle, the Infrastructure Enterprise Edition version 3, costs about $6,500.

Other applications necessary for server virtualisation from both vendors, such as Microsoft's Virtual Server 2005 or VMware Server, are free.

At its VMworld show next week, VMware may announce plans to upgrade VirtualCenter to make it a heterogeneous management platform. Or it may choose to execute on a previously planned price cut.

VMware may have a commanding lead of the market today, but analysts such as Chris Voce at Forrester Research point out that the market is also very young. Many large corporations still remain on the sidelines, waiting to see how this battle between Microsoft and VMware plays out over the next several years before committing themselves to either vendor, he said.