Retail giant Target plans to roll out Microsoft's virtualization technology to its 1,700 stores, giving the software giant's enterprise cloud computing efforts a new boost. Microsoft announced a new deal in which Target will manage such operations as inventory, point-of-sale, and supply-chain management remotely with Microsoft's Hyper-v software. In addition, Target will roll out 15,000 virtual machines using the technology across the country.

VMware, run by former Microsoft senior executive Paul Maritz, dominates the software virtualization business. But Microsoft has been working to cut into that lead with acquisitions and new software. The market offers one of the best opportunities for growth in enterprise computing as companies push to reduce costs by shedding hardware and running systems over Internet infrastructure.

Target

That's why Target is deploying the new Microsoft technology. It's being used to run cash registers and the computers used to guide restocking inventory. The retailer, which manages all of its store technology remotely, says it will reduce the number of servers in its stores from seven to two, eliminating 8,000 servers in the process. That cuts not only the cost of replacing the hardware, but also the expense of maintaining it and even the price of the electricity used to power it. Microsoft doesn't believe it will reduce its server software revenue. "Virtualization can lead to consolidation of hardware resources, but shouldn't negatively impact software licensing," says David Greschler, Microsoft's director of virtualization and cloud strategy for its server and tools business.

The Target deal is a feather for virtualization efforts at Microsoft, which wants to prove its software can handle large, mission-critical applications. "Particularly as organizations are contemplating cloud computing, they find comfort in knowing the Microsoft platform can virtualize and manage all kinds of applications--Microsoft's, a third party's or homegrown--on a massive scale," Brad Anderson, corporate vice president of the company's management and security division, said in a press release.

Hoping to grow its virtualization business, Microsoft has built tools into its Windows Server software to make it easier to run its Hyper-v technology. And while it still trails VMware, it's picked up customers in recent years including Del Monte Foods and Costco Wholesale. That said, Target has been a longtime customer of Microsoft's Virtual Server software, so upgrading to Hyper-v was the logical move, says Brett Waldman, senior research analyst at IDC. "Landing a large, named client like Target is always a big deal, but it does not seem like VMware was ever seriously considered in this case study," Waldman says. What's more, Hyper-v is included in the license for Windows Server 2008 R2, which Target is using, making moving to VMware even more of an expense.