February 19, 2003 2:11 PM PST

Microsoft buy to boost server efforts

Microsoft is acquiring some assets of Connectix, including an unreleased server program and software that permits Windows to run on a Macintosh.

Connectix is best known for its Virtual PC software, but has been trying to recast itself as a maker of server virtualization software, which lets a single machine perform like several independent machines running their own operating systems.

Microsoft, which plans to announce the deal Thursday, declined to comment on financial terms. Some Connectix employees will join Microsoft, although the company did not provide details.

The two companies had been in talks for many months, said Kurt Schmucker, vice president of Mac products for Connectix.

The future for Connectix, and for the products that Microsoft did not acquire, is somewhat unclear. For the next six months, the company's main focus will be the "graceful transition" of the virtualization products to Microsoft, although Schmucker said the company will still support and sell its other products, such as RAMDoubler.

"After six months, we don't know yet," said Schmucker, who is among the many workers joining Microsoft.

Members of the quality assurance, development and product management units are joining Microsoft immediately, while other employees may make the switch after the transition period. San Mateo, Calif.-based Connectix has about 100 employees, Schmucker said.

Connectix has been focusing on its development of the virtualization products over the past year, Schmucker said, adding that the bulk of the company's current revenue comes from its Virtual PC for the Mac software.

"Connectix will continue to exist after the post-acquisition phase," said Jim Hebert, general manager of Microsoft's enterprise server business. "Connectix has been around for a long time and has had a variety of successes in a number of marketplaces. They're really creative guys. I expect they'll do something interesting."

The Mac factor
Representatives of the Redmond, Wash.-based software giant said Virtual PC for the Mac will continue to be sold and that Microsoft plans to continue developing the software, which has more than 1 million active users. A Microsoft executive said the company did not purchase the software to kill it, nor does Microsoft plan to stop developing its native Macintosh software, such as the Mac OS X version of Office.

"Mac OS X applications (are the) best solution for heavy access to applications (like Office)," said Tim McDonough, director of marketing for Microsoft's Macintosh Business Unit. "Virtual PC just takes that to the next level--you can now be compatible with applications that only run on the PC."

In a statement, Apple praised Microsoft's move.

"Adding Virtual PC to its product portfolio is yet another example of Microsoft's continued commitment to the Mac platform," said Ron Okamoto, Apple's vice president of Worldwide Developer Relations. "Virtual PC has helped people who want to own a Mac but need to run legacy PC applications. We're glad to see Virtual PC go into such good hands."

Microsoft also is interested in a server virtualization product that Connectix is developing.

VMware, Connectix's main rival in the server virtualization arena, has the early lead with a product that has been on the market for several years. VMware is profitable and plans to offer a new product next quarter that enables two-processor virtual machines instead of just single-processor models.

Microsoft is important to VMware, Chief Executive Diane Greene said in an interview. Microsoft is VMware's biggest customer, and other customers most frequently run Windows in conjunction with VMware, she said.

Dividing servers into several independent "partitions," each with its own copy of an operating system, was pioneered with mainframes and now is common on Unix servers. Intel servers running Windows are beginning to catch up.

Partitioning is useful for consolidating several lower-end machines onto a single larger machine, a cost-saving measure. It's also good for responding to spikes in processing demands because a partition under a heavy load can quickly be assigned more computing resources than a comparatively idle one. If Microsoft incorporates Connectix's virtualization technology into Windows, the software could profit from these abilities.

As recently as the past few months, Microsoft executives said the company wasn't focused on partitioning. Rather, the company's plan involves using a single operating system on each server but placing limits on how much of a computer's resources, such as memory, a specific application can use.

One analyst praised the purchase and pointed out some wide-reaching implications.

"I think it's a great move for Microsoft," IDC analyst Al Gillen said. He noted that Microsoft had been "noticeably absent" in the virtualization arena. "I would think this is the start of a bigger effort in this space for Microsoft," he said.

Gillen said that, surprisingly, Microsoft would continue to offer non-Windows support provided by the Connectix technology.

"Microsoft told me that they would continue to have as a feature the ability to host a Linux guest operating system running on your Windows server," he said. "A lot of Linux proponents would not approve of that, but a lot of people who are not biased in that respect would not be opposed to using that for some workloads."

Gillen says that support is important as Microsoft seeks to extend its corporate reach. "This is really a heterogeneous play," he said. "You could put NetWare on (Windows server), you could put OS/2 on it."

The Connectix server software supports Linux partitions, but VMware places a high priority on Linux support. "Our belief is that although our customers predominantly are using our software to run multiple instances of Windows, they really do care about having the choice what operating system to run," Greene said.

NT 4 gambit
Initially, Microsoft plans to target the Connectix server technology at its large installed base of Windows NT 4 customers. The company on Wednesday estimated that about 35 percent of Windows customers still use Windows NT 4, making them the leading candidates to move first to Windows Server 2003, which Microsoft plans to launch on April 24 in San Francisco.

Microsoft is so concerned about the large number of customers using Windows NT 4 Server that the company in January extended security and hot-fix support through the end of 2004.

In the interim, Microsoft wants to make moving to Windows Server 2003 as easy as possible for those customers still using 7-year-old NT 4. Initially, the company plans to offer the Connectix technology for partitioning servers running the newer software to support applications from the older one.

"We're going to be able to offer our NT 4 installed-base customers an incremental set of migration tools that make it very straightforward to move an NT 4 application stack over to a modern operating system like Windows Server 2003 on a new piece of hardware," Hebert said.

"What this does," he added, "is make it possible to partition a single processor into multiple subprocessors--i.e., you share a single processor with multiple NT 4 application stacks."

For now, Microsoft will focus more on server consolidation than more-traditional partitioning schemes used on Unix servers and mainframes. But Hebert did not discuss future plans for the Connectix technology.

"As these older machines reach the end of their life...there is a place for them to go that doesn't require much effort on the part of IT organization to keep them up and running," Hebert said.

An enterprise business moving an NT 4 application to Windows Server 2003 might use only 5 percent of the processing power. Consolidation of multiple application stacks would make better use of the hardware, Hebert said.

The consolidation process using the virtual machine technology offers customers other advantages, such as continuing to use existing applications but on a newer operating system with better security.

David Shaw, chief technologist for Simsbury, Conn.-based Genesis ii Associates, said that "NT 4's aging security model" will be one of the major factors driving customers running the operating system to Windows Server 2003.

Still, running the consolidated applications has some drawbacks. "This (technology) is really most useful for applications that are low-throughput and are not generally thought of as critical-response-time applications but are still important for many enterprises to run their businesses," Hebert said.

Microsoft expects the server product to be available for downloading in the middle of the year and to officially ship by the end of the year. Connectix has been beta-testing Virtual Server, and before the Microsoft deal had expected the final version to ship in the first quarter.

"There's pricing in place for the (existing) Connectix products, and I don't believe we have any plans to change those," Hebert said. "I don't think we've priced the server product," adding that the price would likely be "modest."

CNET News.com's Stephen Shankland contributed to this report.

 

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