Microsoft announced that it competed acquisituion of Calista Technologies, a San Jose, Calif.-based start-up that makes computer graphics for virtualized computers, and an expanded partnership with Citrix Systems (nasdaq: CTXS - news - people ), a VMware competitor based in Fort Lauderdale, Fla. Microsoft and Citrix will jointly market services that "virtualize" computers, operating systems and applications.
Microsoft's shot across the bow at VMware is inevitable as companies throughout industry shift to Web-based services. "Microsoft needs to get something into the market quickly," says Roger Kay, president of technology research firm Endpoint Technologies Associate. "Windows Office has 10 years to burn, but it will become less relevant."
He notes that virtualization could prove more profitable for Microsoft than, say, search advertising, where it is a distant No. 3 to Google (nasdaq: GOOG - news - people ), because the company already has a strong presence in the enterprise space.
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