With electricity prices continuing to skyrocket and processors getting ever hungrier for power, it was only a matter of time before Microsoft chimed in with claims that its latest software can cut energy bills. A Microsoft white paper released this week asserts that Windows Server 2008 can cut power consumption by 10% compared with Windows Server 2003 out of the box, and much more if running virtualized.

Microsoft compared power consumption between two installations on the same server with two dual-core processors and 4 GB of RAM, one running Windows Server 2003 R2 Enterprise x64 Edition with SP2 plus hot fixes, and the other running Windows Server 2008 Enterprise Edition, with a hard drive formatting in between.

The company found that Windows Server 2003 used as much as 10% more power despite only being able to deliver 80% of the maximum throughput as its successor. Microsoft attributes these improvements partially to power management features that Windows Server 2008 has enabled by default, like the automatic adjustment of processor performance based on workload.

Another test, on a more powerful, enterprise-class server, found similar though less drastic results. Windows Server 2008 used 2.3% less power when idle and 6.8% less when active. It's unclear from the report whether this shows that power management features found in Windows have less effect on more powerful hardware. Even so, Microsoft estimated that enterprise-class Windows Server 2008 running with 20 active clients would save about $30 annually in power costs.

Of course, virtualization changes the equation entirely. Windows Server 2003 doesn't have an embedded hypervisor, though it can be virtualized with technologies from companies like VMware or Citrix. But instead of measuring power consumption of virtualized instances of Windows Server 2003 running on a physical server to a similar setup with Windows Server 2008 and Hyper-V, Microsoft chose to measure virtualized Windows Server 2008 versus standard Windows Server 2003.

That said, the findings show that four Windows Server 2008 virtual machines running on a physical IIS 7.0 Web server and 20 active clients actually use less power than one Windows Server 2003 IIS 6.0 Web server. As the authors write in the white paper, "if multiple virtual servers can run on a single physical machine without consuming significantly more power than a standalone server, that means you can add virtual servers at essentially no power cost."

One thing that's unclear is how Windows Server 2008 power consumption would compare with Linux server distributions running similar workloads. So while the new version of Windows Server might save power over old versions, it remains to be seen how it does against another operating system or virtualization technology.