VMware said to offer the small-footprint version of its ESX virtualization software free, responding to pressure from Microsoft and other companies that are threatening VMware's lead in the virtualization market.

The next version of ESXi, which will come in about two weeks, will be available at no cost, said VMware CEO Paul Maritz on a conference call Tuesday to discuss the company's second-quarter earnings. ESXi is a basic hypervisor, which is technology that separates the OS from server hardware so multiple OSes can run virtually on one physical server.

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