Like its existing GSX and ESX Server versions, the new entry-level VMware Server can partition Windows and Linux servers into multiple virtual machines running Linux, NetWare, Solaris x86 and Windows, as well as 64-bit OSes, according to the Palo Alto, Calif. unit of EMC Corp. VMware Server also lets a single virtual machine span multiple processors within a single box and can take advantage of Intel Virtualization Technology (VT) on some upcoming Intel server-oriented processors.

VMware was the first vendor to offer virtualization technology, previously available only on mainframe and Unix computers, on commodity Intel-based servers when it launched 1998. VMware's products are used by 20,000 companies.

A slew of mostly Linux-based virtualization startup companies, however, are challenging VMware's dominance. They say VMware's method is slower than their newer "paravirtualization" approach, which tweaks the processor instructions in guest operating system kernels so that they work better with resident hardware.

"VMware is emulating an entire chipset in software. It's slow. We run on the bare metal," said Simon Crosby, CTO of open-source virtualization vendor XenSource Inc.

"VMware has done a good job of pioneering the virtualization market," said Mike Grandinetti, chief marketing officer for Virtual Iron Software Inc. Virtual Iron, in addition to using paravirtualization to run multiple operating systems on a single machine, can also spread workloads across multiple machines in a cluster-like manner. "But VMware cannot scale to enterprise-class workloads. It just runs out of steam."