With rivals clambering at the gate, VMware has opted to offer its bare-bones ESXi hypervisor for free.

The price change is the first major tactical play under VMware's new CEO, Paul Martiz. It's also a pretty logical one considering where the company is at.

It has much to do with Microsoft's recent release of Server 2008 and accompanying Hyper-V hypervisor. VMware has complained Redmond's entry into the x86 virtualization market is making customers pause to weigh their options more thoroughly and less likely to commit to lengthy (and lucrative) contracts.

Martiz — a former Microsoft exec himself — is all too aware of the imminent danger. Microsoft often moves like a glacier, but it's equally difficult to beat back once it covers ground.

"I know Microsoft is a formidable, but not invincible competitor," said Maritz during its earnings report. "It can play a long waiting game. But if a competitor has a lead and invests to stay ahead, they can be very hard to catch — even for Microsoft."

Hyper-V currently comes gratis with Windows Server 2008 (which starts at $999) and will later be offered as the standalone Hyper-V Server for $28. Over in open source land, Citrix has Xen available for free.

By turning its hypervisor into a commodity, VMware hopes to better appeal to the products maturity when compared to its rivals, particularly Hyper-V, which is still in its early days. The trick will be to stay flashy. Dangling an up-front cost of nada always helps.

Of course, before a customer can actually get virtualized, there's management software and services to buy. And that's where VMware will be making its real money.

But still, free is better than $500. Not much to complain about on that front. It's available for download here. ®

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