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Microsoft Cuts Deal With Novell To Support Suse Linux: Page 3 of 5

"Both companies will continue to compete," Ballmer said. "We both recognize the need for interoperability, so while we'll compete, we'll also cooperate in the right way."

For Microsoft, the deal isn't a response to customer demand alone. Microsoft recognizes that supporting Linux is pivotal if it hopes to overtake VMware, the EMC-owned market leader in virtualization software.

Microsoft in April stunned LinuxWorld attendees by pledging it would support Linux virtual machines on its Virtual Server. In addition, Microsoft unveiled free virtual machine additions for Red Hat Linux and Suse Linux.

Another element in Microsoft's virtualization strategy is to boost sales of its Systems Center management tools. The tools need to support virtual and physical environments to be successful.

More than eight in 10 companies are exploring, testing, or using virtualization technology, according to an INS survey of 100 IT execs.