Microsoft shows for the first time its App-V for Servers

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Microsoft continues to tease about the upcoming server-side App-V product that is developing since a long time now.
The company hinted at it for the first time in September 2008, and then again in March 2009, but so far there are no official details about the product features or its roadmap.

Despite that the company showed a 5 minutes demo of it at MMS 2009 last week.

This may be the first application virtualization product ever used for server workloads so it’s clear that Microsoft wants to be extra careful about it.
At the same time it’s clear that the company may want to release it as soon as possible, attacking VMware on an unexpected front.

Yes, App-V is an application virtualization technology and cannot be directly compared with the hardware virtualization approach used by VMware in ESX. But from a strategy perspective Microsoft is much more interested in shifting the competition here rather than on the hypervisors. And this is not because Hyper-V is still behind ESX in the market share stats, or because the Redmond company is not confident that it can win against the current market leader, but because the hypervisor, any hypervisor, takes away the control of the entire stack from the operating system.

Politically speaking Microsoft couldn’t permit this, and technically speaking it simply doesn’t make sense for an OS company.
If VMware and others accuse Windows to be highly inefficient, then Microsoft can’t just embrace the hypervisor as the new platform of choice to run applications without wasting resource. 
Right now the company has no other choice than compete on the hardware virtualization market, but on the long run the Microsoft best interest is to make its OS more efficient, acting directly on the applications and vanishing the need for hardware virtualization.
App-V (both client-side and server-side) is the way to go there and it’s very likely that Microsoft will invest on it much, much more than what it’s investing for Hyper-V.