Microsoft has grabbed nearly a quarter of the fast-growing x86 server virtualisation market in the second quarter, just a few months after the launch of Hyper-V.

According to research company IDC, the success cut VMware's global share to less than twice its own. Counting by licence shipments, VMware had 44 percent of the Q2 market with its VMware ESX and VMware Server products, IDC said.

But IDC analyst Brett Waldman said, "VMware's virtualised licence share is likely to decrease in the long run [as Hyper-V continues to] grow and take share from both [Microsoft's] Virtual Server 2005 and VMware."

Microsoft said the results "reflect the strong customer and partner adoption" of its virtualisation software.  The company  has aggressively discounted Hyper-V to US$28 per server. A standard licence for VMware's ESX Server costs $3,000. Microsoft also released this month a free low-end standalone version called Hyper-V Server 2008 . Higher-end versions of Hyper-V are also free to users of Windows Server 2008. Waldman said shipments of the legacy Virtual Server 2005 still comprised the majority of Microsoft's shipments in Q2, however.

As a result of its heavy discounting, Microsoft only held 1.1 percent of the market by revenue, said Waldman. VMware continues to hold 78 percent of the market by revenue, with sales up 27 percent year-over-year, according to IDC.
Waldman said he believes VMware "has put in place several new initiatives, such as vCloud , to address new opportunities for themselves that Microsoft has not yet taken head on."

Parallels's Virtuozzo ranks second by revenue behind VMware , and third in terms of licence shipments, Waldman said.
"XenSource has seen some momentum under the stewardship of Citrix in the last year. However, in terms on virtualised licenses, they are still rather small," Waldmain said.

Overall, the server virtualisation market slowed again for the fourth quarter in a row, though sales overall are still growing, says IDC. Sales grew 53 percent year over year in Q2, versus 72 percent year-over-year in Q1. virtualisation sales on the x86 platform, or Intel -based servers, were up 60 percent year-over-year.