Microsoft and Novell revealed another layer of their technical collaboration today.

Customers will be able to host SUSE Linux Enterprise Server 10 from Novell as a virtualized guest on an upcoming service pack of Microsoft Virtual Server 2005 R2 service pack 1.

Users will also be able to host SUSE Linux Enterprise Server 10 as an "enlightened guest" on the next version of Microsoft Windows Server, code-named Longhorn, using the Windows Server virtualization technology.

Virtualization, in which multiple operating systems, applications or even storage run on one box, is a charged industry. While VMware blazed a trail in this space, Microsoft, Xen, Virtual Iron and SWsoft have all come to the fore with interesting innovations in the field.

However, many experts acknowledge the vendors will often have to defer their competitive battles to win the trust of customers who may be mulling whether to ditch the traditional siloed server-software box in favor of virtualization.

Hence the deal between Novell and Microsoft, which is no stranger to working with others in virtualization; the software giant embarked on a cooperative competition deal to make its Windows Server virtualization and XenSource's Xen hypervisor work together.

The announcement sent some high-tech followers cooing about how Microsoft is playing nice with open source purveyors; others saw it as a necessary cooperative competition maneuver from Microsoft acknowledging the growing strength of Linux in the industry.

Still others questioned whether the deal would set a bad precedent for other Linux purveyors.

In other aspects of the Microsoft-Novell deal, Novell reaffirmed today that it will release an Open XML/ODF Translator for the Novell edition of OpenOffice.org.

This is a bi-directional translator for documents, spreadsheets and presentations between the OpenDocument format (ODF), which is supported by OpenOffice.org, and Open XML, the default file format for Microsoft Office.

On the Web services front, Novell is working with the open source user community to develop an open source implementation of the WS-Management specification, which Microsoft helped develop.

Moreover, Novell ZENworks Orchestrator and Microsoft System Center Operations Manager 2007 will incorporate WS-Management this year.

Also, the companies are working toward bridging the gap between Novell eDirectory and Microsoft Active Directory identity management software.

However, making normally competing ID management products work together is a tricky proposition because of the customer issues at stake; the companies claim they will offer a "more detailed roadmap" and "a series of interoperability demonstrations" later this year.

The vendors made some noise at the RSA Conference last week, as Novell officials showed how its Project Bandit interoperated with Microsoft's Windows CardSpace ID metasystem.

Today's technical announcement follows on the companies' five-year agreement to co-create software together to give customers more choices while navigating the tricky waters of competition.

As part of the arrangement, Microsoft can use, resell or distribute certificates that customers redeem to receive SUSE Linux Enterprise Server subscriptions for upgrades, updates and technical support from Novell.

Since the announcement, more than 35,000 new certificates for three-year priority support subscriptions to SUSE Linux Enterprise Server have been activated.

Microsoft and Novell count AIG Technologies, Deutsche Bank AG, Credit Suisse and Wal-Mart Stores Inc. as among the first companies to leverage the interoperability agreement.

Novell's principal competitor in the enterprise Linux space, Red Hatis set to release its latest version of Red Hat Enterprise Linux 5 (RHEL 5) sometime before the end of the first quarter of this year. RHEL 5 will be the first enterprise distribution from Red Hat to include Xen virtualization.