BOSTON:
Microsoft Corp said on Thursday it has started selling its new server
virtualization software about six weeks ahead of schedule, putting pressure on
market leader VMware Inc.
Server virtualization software
allows one machine to perform the work of multiple servers, letting companies
save money on equipment, electricity, maintenance and other costs.
Microsoft says it charges $28
per server for its software, dubbed Hyper-V. Yankee Group analyst Laura DiDio
said that a comparable VMware product costs $7,000 to $14,000, depending on how
many processors the server has, though she notes that VMware's software has more
advanced functionality in some key areas.
"The price difference is
jaw-dropping," said Jefferies & Co. analyst Katherine Egbert. "I think that
will cause a lot of people to at least consider Hyper-V." Customers of
Microsoft, the world's biggest software maker, can start downloading the product
from its website on Thursday, the company said.
Microsoft had previously said
it would make the product available in August. VMware shares fell 4.25 percent
to $59.58 in afternoon trading on the Nasdaq. Microsoft shares were down 1.31
percent at $27.98. Officials for VMware were not immediately available for
comment.
Analysts said that
customers who decide to stick with VMware will have increased bargaining power
due to Microsoft's lower price. "I always tell companies to press very hard on
pricing when negotiating with all software companies," DiDio said. "It's a
buyer's market."
Nucleus
Research analyst Rebecca Wettemann said that she thinks Microsoft would be a
credible competitor to VMware. "Microsoft has to be taken very seriously because
of its size. Microsoft is going to make inroads," she said.
VMware controls the vast
majority of the server virtualization software market. The company is 86
percent-owned by EMC Corp. Other companies that compete with VMware include
Citrix Systems Inc, Oracle Corp, and two privately held companies - Virtual Iron
and Parallels.