An upgraded version of the XenSource virtualization hypervisor out Monday closes the features gap with market leader VMware, but a wide market share gap between the two companies remains, an industry analyst says.

XenSource, whose product is based on the open source Xen distribution, is introducing XenEnterprise v4, adding features that may make it as appealing as VMware's hypervisor, said John Humphreys, senior analyst at IDC. VMware holds an 85 percent share of the market for virtualization software, while XenSource and other contenders each hold shares in the low single digits.

A XenEnterprise v4 license lists for $2,499 plus $500 per year for technical support, including free updates to subsequent versions of it, said John Bara, vice president of marketing for XenSource. The latest version of a comparable VMware offering is Virtual Infrastructure 3, which lists for $5,750 per license for a two-socket server plus $1,200 per year for support.

Companies that buy a hypervisor to virtualize their datacenters consider performance, workload balancing, and high availability more important than price, said Humphreys. But if XenSource can prove its hypervisor to be reliable and effective as well as less expensive, it could gain share on VMware.

"If you can raise the bar to [match] the market leader in terms of features, functions, and capability as well as stability, now you can make price something that customers can weigh," Humphreys said.

Among its other features, v4 includes XenResourcePools, which gives users the ability to provision server and storage resources as a group rather than one at a time. "That's a real differentiator for us that we can do almost a global provisioning of systems," said Bara.

XenEnterprise v4 can host up to eight virtual CPUs on each guest VM (virtual machine) and an unlimited number of VMs per physical server. It also includes a new virtualization system management interface.

XenEnterprise v4 also adds XenMotion, which allows a software application to be moved from one server to another while still running. VMware has had a feature like that, called VMotion, available since 2003.

XenSource scored a coup by partnering with Symantec to include its Veritas Storage Foundation industry-standard storage management software in XenEnterprise v4 for data backup and recovery, said Chris Wolf, an analyst with the research firm Burton Group.

"Most of your enterprise backup ISVs are only officially supporting VMware backup solutions. Symantec will offer official support for XenSource backup and recovery as part of their Net Backup platform. That is still the dominant backup product in the enterprise today, so that's very substantial," Wolf said.

VMware, a subsidiary of EMC, is going public, selling a 10 percent stake in VMware in an IPO. The stock could go public as early as Tuesday. EMC last week raised the opening price range to $27 to $29 a share, from the $23 to $25 range it projected earlier, given the market interest in the IPO.

This story was corrected on August 13, 2007