"It's coming down to the final stretches," said one source close to Microsoft who is familiar with the discussions. "It's not a done deal yet but it's just last minute haggling kind of stuff."
That's not all. At its hardware conference for OEMs next week, Microsoft is expected to announce plans to accelerate the delivery of its homegrown virtualization hypervisor code-named "Viridian" and will formally debut plans for a virtualization management platform code-named Carmine.
The deal with Softricity -- which hit the rumor mill earlier this week -- is expected to be finished before the Windows Hardware Engineering Conference (WinHEC) in Seattle next week. Sources say Microsoft at WinHEC also will unveil Virtual DLL, a feature for Windows Vista developed in conjunction with Softricity.
The feature will not enable full application virtualization offered by Softricity's SoftGid platform but it will allow users to virtualize application registries and "end DLL hell once and for all," one source said.
"I know Microsoft has been talking to Softricity and has worked with engineers at Softricity," said another source familiar with the joint development work on Virtual DLL by the two software companies.
"It allows you to have a virtual registry instead of a single registry so you have can have multiple DLLs sitting on the registry," he continued. "The benefit for us is to remove application conflicts. With this, you can have Office 97 and Office 2003 on the same machine."
Softricity did not respond to CRN calls for comment. A Microsoft spokesperson said only that the company does not comment on "speculation."
Sources say they are not surprised about the deal with Softricity, a former Citrix ISV that has quickly emerged as a key Microsoft ISV partner over the past six months.
At Microsoft Management Summit last month, Microsoft highlighted Softricity's new SoftGrid 4.0 for Systems Management Server 2003, which allows IT managers to virtualize Windows applications on the fly from within the management platform.
The flurry of activity in Microsoft's virtualization unit comes as VMware -- the market leader in the explosive virtualization software market -- is expected to announce availability of its next generation ESX Server 3.0 and VirtualCenter 2 platform during the first week of June.
In addition to its application virtualization push with Softricity, Microsoft will try to slow adoption of VMware's platform by announcing a stepped up delivery plan for Viridian, sources told CRN.
Microsoft plans to put Viridian into private beta with a limited number of partners sometime in the fourth quarter, sources said.
The hypervisor, which will replace its standalone Virtual Server product, was originally planned to be integrated into Windows Longhorn Server in 2006. That server is now due to ship in the second half of 2007.
But company executives later amended that plan and said Viridian would be in the R2 release of the Longhorn server. R2 is not expected to be available until 2009 or 2010.
Sources said Microsoft is speeding up its Viridian plans and pushing forward on its virtualization management plans and application virtualization efforts to appease corporate customers that want a VMware-like platform but don't want to wait much longer.
Microsoft is very worried because corporate customers are really pressuring the company to step it up or they will go to VMware, sources said, noting Microsoft's recent agreement to license its virtual Hard Disk format to XenSource -- an open source company.