Uptake of the software giant’s Hyper-V hypervisor is expected to be strongest among smaller companies, where its affordability is most likely to give it an edge over more sophisticated rivals.

With the release of its Hyper-V hypervisor, Microsoft finally has a server virtualisation product with which to rival the likes of VMware. But experts believe that Hyper-V is not yet ready for the enterprise market, and that Microsoft is likely to see greater success in small and mid-size companies, at least in the near future.

Formerly codenamed Viridian, Hyper-V is a thin software layer, sandwiched between the hardware and operating system, that can be used to virtualise both Windows and non-Microsoft operating systems. To deploy Hyper-V, firms need the 64bit version of the Datacenter, Enterprise or Standard edition of Windows Server 2008, and servers based on processors with Intel’s Virtualisation Technology or AMD-V, both of which provide hardware support for virtualisation. “Firms will be able to upgrade their Windows Server 2008 deployments with Hyper-V through Windows Update from 8 July,” said Bill Laing, general manager for the Windows Server Division. The code can also be downloaded through TechNet and the Microsoft Developer Network (MSDN).

But while Microsoft’s virtualisation platform is now in place, a vital component needed to manage and control virtual servers is still missing. System Center Virtual Machine Manager (SCVMM) is only available as a beta release, having initially been unveiled at the end of April. Laing would not give an exact release date for the final version of SCVMM, but said it should be available in the next few months.

Neil Macehiter, research director of analyst firm Macehiter Ward-Dutton, advised firms against deploying Hyper-V in production environments at present. “Lack of SCVMM should not prevent them evaluating the technology, but firms should wait for the full release before production deployments,” he said. Macehiter added that Microsoft’s failure to co-ordinate the release of the two products was unfortunate “given that management is so critical to the effective exploitation of virtualisation technologies”.

Laing said that Microsoft’s ambition for Hyper-V is to make it easy and cost effective for Windows customers to use virtualisation. Feedback from customers suggests they find Hyper-V very easy to deploy, he added. “If you know how to set up and install Windows, and you know how to configure roles in Windows Server 2008, that’s about everything you need to know,” Laing explained.

Microsoft sees Hyper-V carving out a role in a range of areas, including server consolidation, business continuity and disaster recovery, testing and development, and datacentre and branch office management. However, the software giant faces a tough challenge entering the datacentre, where VMware is the current market leader.

While VMware expects to face competition from Microsoft’s virtualisation package, the firm pointed out that Hyper-V cannot match the capabilities of its own products. “Microsoft is only now delivering a hypervisor product, albeit one which is considerably pared down functionality-wise from that originally promised,” said Reza Malekzadeh, VMware’s European marketing director.

Hyper-V is missing features such as automatic virtual machine migration and the ability to balance workloads across entire server farms, but one factor in its favour is that it effectively comes for free with Windows Server 2008.

One firm looking to take advantage of this is car maker BMW, which plans to migrate a retail server platform that serves 3,500 dealerships worldwide from Windows Server 2003 and Virtual Server 2005 to Windows Server 2008 with Hyper-V over the coming few months, according to Laing.

Butler Group senior research analyst Roy Illsley agreed that Hyper-V lacks some of the more advanced features found in products from VMware, Citrix and Virtual Iron, but said that Microsoft may initially be looking at the small-to-medium business (SMB) sector as the main target for its hypervisor. “I believe that the link-up with Citrix demonstrates that Microsoft is going after the SMB sector with Hyper-V and leaving XenServer to compete in the enterprise market with VMware, at least while it works on making Hyper-V as technically capable as its rivals,” Illsley explained.

Citrix and Microsoft are working together to integrate support for the former’s XenServer, XenApp and XenDesktop virtualisation products into the latter’s system management platforms. Illsley added that VMware will struggle to compete with Hyper-V in the SMB market. “VMware is attempting to move into the SMB space with pricing bundles. But while it provides superior capabilities in its package, it lacks a clear understanding of the market, and how to deliver to the SMB sector,” he said.