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Also during this afternoon's demonstration in Bellevue, Microsoft COO Kevin Turner indicated that live migration could come in very handy down the road, as he articulated a new Microsoft strategy toward using its virtualization software for supporting clouds running in a choice -- and often a mix -- of three places: the customer premise, servers hosted by Microsoft partners; and servers hosted by Microsoft itself.

Beyond implying that users will eventually want to move some of their virtualization deployments from the customer premise to an outside host, as they grow more comfortable with external hosting, Turner also pointed to the pluses of virtualized servers for both server consolidation and quickly migrating applications to a different data center in case of a disaster.

Tom Bittman, an analyst at the Gartner Group, told the attendees that the "software as a service" orientation, utility pricing, and "elasticity" of cloud computing are now making their way into internally hosted enterprise applications as well as Internet-based clouds.

Virtualization is now "unlocking cloud computing" in both kinds of environments, according to the Gartner analyst.

Bob Muglia contended that Microsoft now offers the most "complete" set of virtualization products in the industry.

The three new products introduced today included Microsoft Application Virtualization 4.5; Microsoft Hyper-V Server 2008; and System Center Virtual Machine Manager 2008. Up to now, release candidates of the final SCVMM were only capable of working with something less than the final version of Hyper-V, though they could also work with software-hosted VMs built for Virtual Server 2005 R2.

Application Virtualization 4.5 will be bundled into Microsoft Desktop Optimization Pack 2008 R2.

Hyper-V Server 2008 -- a standalone version of the hypervisor in Windows Server 2008 -- will be available free of charge, according to Microsoft, and SCVMM will be distributed to System Center customers who have essentially already paid for it. Last month, Microsoft announced that VMM would be available separately from VMM, for a licensing fee of $675; that news was repeated today. Hyper-V Server 2008 will be geared to use with previous versions of Windows Server. Components will also be available for integration with SuSE Linux, the Linux OS produced by Novell, with whom Microsoft has an interoperability pact.

As competition heats up to become the underlying OS of choice for virtualized apps, Novell's main rival, Red Hat, last week announced the acquisition of Qumranet, the start-up behind the KVM (Kernel Virtual Machine) virtualization platform.