In a shot across VMware’s bows, Citrix will announce next week that it will be offering free licenses to its full XenServer virtualization program and new partnering with Microsoft to provide system management, Citrix Essentials, for Hyper-V and, in return, Microsoft’s System Center will support XenServer
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The virtualization wars are heating up. According to sources, Citrix Systems, the Xen virtualization company and long-time Microsoft partner, will announce on February 23rd that it will no longer charge for its flagship program, XenServer.

Citrix will not, however be open-sourcing XenServer. While Xen, the hypervisor itself, is open source, XenServer, according to Citrix, contains proprietary code that makes it much easier to setup and maintain and is a much more polished and reliable virtualization platform. In the past, XenServer 5 pricing started at a suggested retail price of $900 per server, regardless of how many CPUs or sockets were on the system. Starting soon, XenServer 5 won’t cost users a penny.

So how does Citrix plan to make money? By offering a new Citrix virtualization management product line that adds advanced virtualization management capabilities to both XenServer and Microsoft’s Hyper-V virtualization technology.

This new line, Citrix Essentials for XenServer and Citrix Essentials for Hyper-V, will make running multiple virtualization systems and machines much easier. Among other features, Citrix claims that it will automate the VM (virtual machine) lifecycle to simplify and streamline workload creation and delivery. It will also make virtualization more scalable by provisioning virtual and physical servers from single, master images to lower costs and reduce VM sprawl and more agile by simplifying storage set-up, configuration and operations in the virtualized data-center. For these programs, Citrix will charge from $1,500 to $5,000 per server.

Citrix isn’t just supporting Hyper-V, though, it will also announce a new partnership with Microsoft, “Project Encore.” In Project Encore, Microsoft will add management support for XenServer in System Center, Microsoft’s high-end system and data-center management software suite. In addition, the two companies will jointly promote their combined solution worldwide

It’s also expected that at least one of the two major Linux companies, Novell or Red Hat, will announce their support for the new XenServer and Citrix Essentials for XenServer. It is not known, however, which of the companies will be making this jump.

Novell already has a history of working with Microsoft on virtualization and, with Intel, was the first to make it possible to run Windows Server on Xen on Linux. Red Hat, though, has just announced that it was partnering with Microsoft on virtualization. Perhaps both of the major Linux distributors will be using some of the products of this new Citrix/Microsoft relationship.

In any case, Dan Kusnetzky, a leading virtualization analyst at the Kusnetzky Group, said that Citrix’s renewed partnership with Microsoft and its new focus on virtualization management “makes sense. Citrix is a long-time partner with Microsoft. It is also facing intense competition from VMware, Microsoft, the rest of the Xen community and the KVM community over the hypervisor. That means that the hypervisor is going to rapidly become a commodity. It also means that Citrix is doing its best to make its other assets, such as management and security software for virtualized environments important”