Windows Server 2008's eagerly awaited Terminal Services is a respectable presentation virtualization alternative for smaller shops, but for large enterprises, Citrix Systems still reigns supreme. That's the--not unexpected--finding of the first installment in our ongoing Windows Server 2008 Rolling Review. From a product-positioning perspective, Microsoft is walking a fine line, responding to calls for more core Terminal Services functionality in Windows Server, yet keeping its hands mostly off the large enterprises that comprise Citrix's core audience.

While we found many enhancements in Windows 2008 Terminal Services, including better session and print driver management, load balancing, and single sign-on, there are three major functionality additions that companies weighing the choice of Microsoft's versus Citrix's presentation virtualization must consider: Terminal Services RemoteApp, Gateway, and Web Access.

In the past, Microsoft has gotten beat up pretty regularly for the dearth of enterprise-level thin-client functionality in Terminal Services 2003, especially when compared with Citrix's offerings. From a strict functionality standpoint, the criticism was warranted. But functionality doesn't tell the whole story. For every Citrix XenApp (formerly Presentation Server) license sold, Microsoft requires purchase of not only a desktop client access license (CAL), but also a Terminal Services CAL.

In addition, Citrix is one of just a handful of companies with access to the Windows Server OS source code. Microsoft is making millions on CAL licensing no matter which direction Windows shops choose to go, and given that, there's little motivation to go after Citrix in head-to-head competition.

The company's official stance: "Microsoft and Citrix continue to be strong partners; this perception [of competition] arises with each new release of Windows Server/Terminal Services," says Alex Balcanquall, Terminal Services product manager. "Together, over the years, we have continued to deliver great joint solutions to our mutual customers. Windows Server 2008 Terminal Services is about reaching out to net new customers, those that aren't using presentation virtualization today.