For Microsoft and VMware, the high-stakes effort to supply management software for the virtualized data center continues, with both companies now using some of the same terminology. But the similarities stop with talk. The two competitors have very distinct points of view on how to build out the enterprise private cloud.

At a virtual event Tuesday, Satya Nadella, president of Microsoft's server and tools business, released Windows Server 2012 as an operating system "built from the cloud up." Nadella said Windows Server 2012 can be used to power both Microsoft's public Azure Cloud and Microsoft customers' private clouds.

That's a new role for Windows in the cloud era. "Only Microsoft is able to offer the consistent platform that the cloud demands," said Nadella during the virtual event, staged in Redmond, Wash.

The Windows Server 2012 that hosts Microsoft Bing, Xbox Live, Windows Live, Office 365, and Dynamics CRM is the same Windows Server that you should use to build out a private cloud, "a dynamic, multitenant infrastructure that goes beyond virtualization." The private cloud manages compute, storage, and networking as pooled, logical resources in the same way that the public cloud does, he said.

This enables a data center manager to make use of his existing Microsoft technologies, such as Active Directory and Visual Studio, across both private and public cloud architectures, he said. "It is that consistency that will enable customers to use common virtualization (Hyper-V), application development, systems management, data, and identity frameworks across all of their clouds," Nadella added.

[ Learn more about VMware's approach to on-premises, private cloud computing. See VMware Focuses On Private Cloud, Dumps Unpopular Pricing. ]

Michael Park, corporate VP of Windows server and tools marketing, referred to Windows Server 2012 and Cloud OS interchangeably. He said in an interview that Microsoft has gained experience in managing Azure with 200,000 servers in a single facility. "We get the learning (on cloud operations) from scale," he said. Azure operators "don't have to be pleasant to us because we're all in the same family."

Microsoft puts the results of that experience into both System Center management software and Windows Server, so customers may load up a physical server with up to 64 virtual machines and a terabyte of virtual memory, "sweating the box." Park added, "we can go to the Nth degree of what anybody is going to do in virtualization," and still manage the environment with hundreds or thousands of Windows Server machines.

Among other changes, Microsoft has:

-- Expanded the capabilities of Hyper-V Live Migration to allow it to generate a copy of a virtual machine on a distant Hyper-V host that is not part of the VM's original rack or data center location. The feature, called Share-Nothing Live Migration, allows the VM to be moved to any host on the Ethernet network, without the user knowing that the move has occurred. The VM's IP address now follows it wherever it goes, allowing database connections and other dependencies to function as they did before the move, said Park. Windows Server 2012 performs mirrored writes of the VM and its data to both the existing storage and destination storage to ensure continuous operation of the VM, he said.

-- Upgraded DirectAccess in Windows Server so that it may work with a variety of clients' incoming connections and route them through one DirectAccess server instead of multiple servers. It can handle requests for access from clients of Windows 8, XP, MacOS, and Linux or mobile devices. The setup wizard now pushes policy objects governing groups of clients' access into Active Directory, Park said.

-- Added the PowerShell 2400 management interface that comes with Windows Server to System Center 2012. It includes Command Lets, or the ability to assemble scripts that generate a multipart service, Park said.

If Microsoft can encourage customers to rely on Windows Server to virtualize more of the data center, it will also encourage users to convert more of their VMware virtual machines to run under Hyper-V and Windows Server. Even if they are left as ESX Server virtual machines running under Linux, since early this year, they can be managed through the System Center 2012 management console.

Where Microsoft talks about the Cloud OS, VMware is talking about the software-defined data center and its own vSphere 5.1, vCloud Director, and vCenter Operations products as vCloud Suite, an emerging data center operating system. VMware's new CEO Pat Gelsinger said in a press conference last week at VMworld 2012, VMware's user group meeting in San Francisco, that VMware, Microsoft, and OpenStack open source code vendors are all offering business data centers a "private cloud in a box."

Unlike Microsoft, however, VMware is preparing for a world of multivendor clouds where customers wish to move across environments with different workloads. Its acquisition of network virtualization startup Nicira for $1.26 billion is aimed at giving VMware customers the ability to move from their internal private clouds out to Amazon Web Services, Rackspace, Google Compute Engine, or other public clouds, including OpenStack-based clouds.

"Everybody knows now you can't compete with Microsoft on price. You compete with Microsoft on value," said Paul Maritz, the outgoing CEO of VMware at VMworld's opening. Maritz became chief strategy officer of VMware's parent company EMC on Sept. 1.

At a press conference shared with Maritz, Gelsinger said it's his belief that most companies will get acquainted with public clouds and use them for limited, low-risk workloads. But what they really want is a public cloud-like infrastructure in their own data centers.

As Microsoft builds out its Azure cloud data centers to work with Windows Server 2012 on premises, VMware is building out an ecosystem of public cloud suppliers that offer compatibility with its VMware workloads. There are 8,500 such suppliers, many of them small, regional services, said Steve Herrod, VMware CTO, during VMworld's opening day keynote.

VMware has commissioned a handful as its top-tier suppliers using vCloud Suite with data centers around the world. They include BlueLock, Dell, CSC, and AT&T in the U.S.; Singtel in Singapore; Softbank in Japan; and Colt and Deutsch Telekom's T-Systems unit in several European countries. CSC, Dell, and T-Systems are new additions to the top-tier suppliers.

Microsoft claims its approach to the cloud, both private and public, is five times less expensive than VMware's. VMware, in turn, says its data center-wide and cross-vendor point of view will be less expensive in the long run, when customers are serious about using both public and private clouds.