The virtualization software, formerly called Viridian, is slated to become part of the Windows Server 2008, sometime after Windows Server gets upgraded in February.

Microsoft (NSDQ: MSFT) delivered what it called "a holiday surprise" to its customers and business partners Thursday by issuing a beta version of its Hyper-V virtualization hypervisor.

"Delivering the high-quality Hyper-V beta earlier than expected allows our customers and partners to begin evaluating this feature of Windows Server 2008 and provide us with valuable feedback" said Bill Laing, general manager of the Windows Server Division, in a prepared statement.

Hyper-V is slated to become part of the Windows Server 2008, sometime after Windows Server gets upgraded in February. Microsoft has said Hyper-V will be available within six months of the release of Windows Server 2008. The beta software was included in Windows Server 2008, Release Candidate 1 Enterprise, which became available for download.

By issuing Hyper-V in a beta version early and certifying it as "high quality," Microsoft is sending a signal that it may not be as far behind in virtualization technology as it sometimes appears. The sooner it can get its hypervisor into the hands of developers, the sooner it can start competing for mindshare with market leader VMware and its ESX Hypervisor.

The beta version includes such features as Quick Migration, which allows an administrator to migrate a virtual machine from one physical machine to another "with minimal downtime," according to the description of the feature on Microsoft's Web site.

Analysts say only about 5% of Intel (NSDQ: INTC) and AMD (NYSE: AMD)-powered servers have been virtualized so far. There is a scramble on to participate in the virtualization of the rest of the market, with bothSun Microsystems (NSDQ: JAVA) and Oracle (NSDQ: ORCL) adding x86 instruction set hypervisors to the fray last month.

VMware's Bogomil Balkansky, senior director of product marketing, said in an interview that Microsoft was coming late to the party. "We've been selling products since 2001 Microsoft is shipping in beta something that represented the state of the art five years ago."

What would have been a surprise, Balkansky claimed, was if Microsoft included live migration capabilities in the beta of Hyper-V. One of the most popular features of VMware's product set is VMotion, the ability to move a running virtual machine from one physical server to another without interrupting users. Live migration "is still not there for Microsoft," he said.

Balkansky also pointed out in an interview that the beta version of Hyper-V resembled the open source Xen hypervisor in one aspect. Both make use of a special purpose virtual machine to manage the I/O of other virtual machines running under one instance of Hyper-V. With Xen, that special purpose VM is known as Dom0 or domain zero. Under Hyper-V, the special VM is known as the parent VM.

As Microsoft talked about Viridian, its previous name for its hypervisor, observers wondered whether some of it would be patterned on open source Xen. The commercial company behind Xen, XenSource, struggled to make headway against VMware's products and entered into a technology sharing alliance with Microsoft. XenSource was expected to contributed its Linux expertise to the Microsoft hypervisor and ensure interoperation with Linux. XenSource acquired in October by Citrix Systems, a close Microsoft ally.

Microsoft said Windows Server 2008 will be launched Feb. 27 in Los Angeles and will include role-based management. Many features of the server will be activated or left inactive, based on the role selected for the server being initiated. One of the roles eventually will be Windows Server 2008 as a virtualized server.

Microsoft has focused attention on the launch of Windows Server 2008 as marking its entry into the virtualization race, but in mid-November it backed off saying Hyper-V would be available "as a feature of the operating system" to say it would become available as a stand alone product as well.