The virtualization market is expected to heat up this year as Microsoft and the open source Xen project challenge VMware, which has been the only game in town when it comes to virtualizing x86 servers.

“Both have been talking up their plans and efforts for months, as well as their proposed superiority over competing solutions — namely VMware. In 2007, customers will finally be able to tell for themselves," says Charles King, analyst at Pund-IT Research.

Don’t expect Microsoft or Xen to leapfrog VMware right away. After all, VMware has been selling its products since 2001. In addition, it has evolved beyond a simple way to partition a server into multiple operating-system instances into a broad systems infrastructure tool that lets customers pool virtual resources and allocate them as business needs demand.

Click to see: Art Beane, IT enterprise architect, Aegis Mortgage

Customers can expect virtualization vendors to start heading in that direction as the focus moves beyond the hypervisor into the management realm. VMware, Microsoft, XenSource and Virtual Iron offer low-level virtualization capabilities for free. But IDC expects North American software revenue in the virtual machine market to continue to grow from $324 million in 2005 to more than $1 billion by 2010, as companies spend money on virtualization-management tools.

For example, Art Beane, IT enterprise architect at Aegis Mortgage in Houston, is moving VMware out of test and development and into production environments this year. He plans to use VMware to support business continuity and disaster recovery. "For 2007, we’re going to be putting most of our effort into moving production [servers] to virtual [environments], and that will more than likely drive us to enhancing the management environment," he says.