Microsoft on Wednesday said it's on schedule to ship next year small and midsize business versions of Windows Server 2008, with an upgrade for the enterprise version scheduled for release in 2009.

In the second-day keynote at the Windows Hardware Engineering Conference in Los Angeles, Bill Laing, general manager of Microsoft's Windows server division, said the mid-market server, codenamed Centro, would ship next year. The small-business version, codenamed Cougar, would ship the same year, as would a storage server based on Windows Server 2008.

Both SMB servers would be the first from Microsoft to require 64-bit hardware. Throughout the show, starting with chairman Bill Gates' opening keynote on Tuesday, Microsoft has made it clear that the enterprise version of Windows Server 2008 would be the last of the server operating systems to run on 32-bit hardware. "Sixty-four-bit is the future," Laing said.

In 2009, Microsoft plans to ship release two of Windows Server 2008. The first release of the new operating system is in beta 3 and scheduled for release to manufacturing at the end of this year. Computer makers are expected to start shipping products with the new software in early 2008.

Microsoft's strategy is to cover the full breadth of the server market, starting with the home and ending with the enterprise. The company plans to ship this year the Windows Home Server, which is currently in beta. Home Server is built on the code base for Windows Server 2003.

In scaling Windows Server for the enterprise, Microsoft has adopted capabilities that were once the sole domain of the mainframe. "We're bringing mainframes to the mainstream," Laing said.

To demonstrate that, Laing showed off failover capabilities in Windows Server 2008 using an NEC Express5800/1320 server running one instance of the operating system on two cells in one partition. Each cell had four Itanium 2 processors with a total of 4-Gbytes of memory.

Using the Windows Hardware Error Architecture in Server 2008, three hardware errors in one of the cells triggered a migration to a spare cell, a process that brought the system down for less than four seconds. Once the change was completed, the broken cell could be removed while the system was still operating.

Virtualization is another area with its roots in the mainframe world that Microsoft is bringing to Windows Server 2008. The technology allows companies to run multiple operating systems, or multiple versions of the same operating system, in order to run more business applications in a single computer, using more of the machine's processing power.

When Microsoft releases Windows Server 2008 to manufacturing, it will include a beta version of hypervisor technology, codenamed Viridian. Hypervisor is a system program that provides a virtual machine environment.