Glendenning said in addition to being the first endorsement of open source in the enterprise, Microsoft's partnership with XenSource involves collaborate development which will result in full support for Longhorn server when released next year.

"The most significant thing about this week's announcement is the market now has a choice which it hasn't had before," he said. "From a customer and channel partner perspective having an option is important. Our job is make sure Xen enterprise delivers the best virtualization in the market."

XenSource will announce its ISV program this month where a number of "big name" software developers can add functionality to Xen to rival other offerings.

Xen users include the high-profile Amazon e-commerce site and Sydney-based fashion design and direct sales company UnderCoverWear.

"It's difficult to count the number of users. The tech has been the market for four years and is well deployed," Gelndenning said. "It's important for the enterprise to understand it's well deployed and is integrated into Intel and AMD [architectures]."