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Sun took Xen one step further by ramping up its capabilities for high-availability and performance. The company has added predictive self-healing, a technology that adds a software layer that can survive a CPU or memory failure and protect the applications that were running. It has also added its ZFS file system technology, which provides an advanced backup and snapshot technology for protecting guest virtual machines.

With Sun's virtual network technology, which will be available in the second half of this year, users will be able to hand out network shares, do bandwidth metering and limiting and "in effect let users guarantee the same quality of service in the same way as they do with the CPU," Wilson says.

Sun also is complementing xVM with a management platform called xVM Ops Center, which also will manage Sun Containers and LDoms at some point later this year.

Where does all this leave Sun competitively right now, compared to VMware and Microsoft? "IT organizations with favorable relationships with Sun have been interested in holding off on x86 virtualization projects until xVM Server matures," says Chris Wolf, a senior analyst with the Burton Group.

"Sun has a lot of work to do to go after the x86 market and they face formidable competition," Wolf says. "Still, Sun has a very good end-to-end virtualization strategy, and I think a number of organizations would look highly on a centralized virtualization management stack that includes LDoms, Solaris Containers, and Xen-based virtualization."

Sun took the right approach in designing xVM to run VMware and Microsoft VMs unmodified on the Xen hypervisor, Wolf says. But he adds that convincing organizations with little or noSun installed base that Sun is the right virtualization vendor for them is going to take time.

"At this point, I'm not ready to rule out Sun as a potential major competitor in the virtualization space," Wolf says.

Deni Connor is principal analyst for Storage Strategies NOW, a research firm focusing on storage and server systems, in Austin, Texas. You can reach her at dconnor@ssg-now.com.