Virtualization software provider XenSource next week will launch its first product, XenEnterprise, competing head-to-head with industry leader VMWare in the space, its chief executive officer (CEO) said Thursday.

“XenEnterprise is ready to go. We believe there is a lot of demand for this stuff,” said Peter Levine, president and CEO of XenSource, after an address at the LinuxWorld Conference and Expo in San Francisco.

Levine described it as a soft launch, with a more formal launch to follow in the fourth quarter of this year. XenSource has set up a two-tier sales channel and distributors around Europe and North America, he said.

XenEnterprise, an open-source product, serves as a hypervisor, an overarching software program that helps an enterprise manage a disparate computer network holistically. Enterprises struggling to reduce costs and control an unwieldy IT infrastructure find that multiple servers are often underutilized. Virtualization, as it’s called, allows multiple applications to run on one server but operate independently, allowing the enterprise to better utilize its servers.

Although virtualization has been the buzz among technology providers, only 6 percent of enterprises have actually deployed virtualization on their networks, said Levine, citing a TWP Research report. That makes the other 94 percent a wide-open market.

XenSource’s open-source solution competes against the proprietary virtualization systems from VMWare, a unit of EMC. Levine acknowledged VMWare’s role in establishing virtualization.

“VMWare has done a great job of educating the market. As a startup, we don’t have to go out and say virtualization is important because of this or that. VMWare has done that,” Levine said.

XenEnterprise is supported in the new release of Novell’s Suse Enterprise Linux distribution, while Microsoft pledged to support Xen-virtualized Linux with its forthcoming Longhorn server virtualization technology. IBM, meanwhile, announced that its low-end servers and middleware will support Xen via the new Suse release.

Although the concept of virtualization has been around for years in mainframes, it is now catching on in client-server environments, Levine said, and is changing the industry.

“Virtualization is having an amazing global impact. It hasn’t solved hunger, but it is having a significant impact,” Levine said.

-Robert Mullins, IDG News Service (San Francisco Bureau)

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