While VMware is the clear leader in the virtualization technologies space, Microsoft has been lurking in second place for several years. But just what is it up to?

As noted in a recent report from 451 Group analyst John Abbott, in 2005 Microsoft announced its own hypervisor product, called Viridian, which would ship alongside Microsoft’s release of its Windows Server 2008 (also known as Longhorn) and would be a “serious threat” to VMware. Eighteen months later, Abbott writes, things don’t seem to be looking so good. “A promised public beta delivery of Viridian has been delayed to the second, rather than the first, half of 2007, and some key performance and scalability features will be held back to meet the shipment schedule.” (Microsoft has stated it plans to ship Viridian within 180 days of shipping Windows Server 2008.)

Abbott’s overriding question: Will Microsoft put up a significant fight, or is it already too far behind? Although there have been some technical snafus, Abbott predicts that if Viridian is “tightly bundled with the next generation of Windows, the company will win business by default.” That’s because Microsoft has its operating system and applications (SQL Server and Exchange) franchises to leverage, he notes. “Making virtualization a component of these existing offerings could squeeze out competitors,” he writes.

CIOs interviewed for this article say they’re interested in what Microsoft’s plans are but are content to wait and keep using VMware’s products. “VMware’s ESX server product,” says Matt Wilson, VP of IS for Chevy Chase Bank, “is the only enterprise-class solution right now.”