Watching VMware stock and its market cap spike since it IPO'd must have had Red Hat positively pea green with envy - so green in fact that it's gonna try taking VMware on by pushing the Xen virtualization integrated in Red Hat Enterprise Linux (RHEL).

Red Hat's new goal is to underpin 50% of the world's servers by 2015.

And since virtualization is projected to take over the world by then that's a lot of Xen virtualization - and there's no extra cost in it like there is with VMware since it's bundled with RHEL. (Red Hat's telling people they'll save $20,000-$30,000 a server.)

Red Hat claims it's got its first 18,000 virtualized servers - although it's a little fuzzy about whether those 18,000 are actually in production - anyway, it's confident they'll get there eventually after all the testing and evaluating is done.

See, RHEL 5.0, the first version of the OS to include the open source Xen, has only been out since mid-March and may have had, oh, a few problems at the virtualization end. But now - at least as of Wednesday - the company can offer RHEL 5.1, the promised fix that's supposed to tighten up and smooth out Red Hat's support for the Xen paravirtualized hypervisor and let it do stuff like the live migration that it was having trouble with before as well as big fat apps.

RHEL 5.1 is advertised as delivering considerably broader server support than proprietary virtualization and up to twice the performance, allowing greater server consolidation (which may ultimately prove a mixed blessing). It's also supposed to have "significantly" enhanced support for Windows guests, be they XP, Windows 2000,2003 and Windows 2008 beta guests.

Red Hat claims its rivals don't scale to support large numbers of cores or CPUs, or memory for that matter, limiting the customer from really utilizing its infrastructure - or forcing it to use multiple virtualization platforms. Red Hat is promising consistency from small servers to mainframes on Linux and Windows.

Now, part and parcel of all this is the idea that you should be able to virtualize any application. Which means you've got to have applications - and there are only 3,400 certified Red Hat apps. Which is where Red Hat's newly articulated Linux Automation strategy comes in.

It's supposed to let CIOs run any application in any environment at any time, including traditional servers, virtual servers, appliances on demand, all with a unified set of development, deployment, management and orchestration tools either available now or in development.

Enter the Red Hat Appliance Platform, an rPath knockoff, laid out as bait for ISVs along with the promise of "certify once, deploy anywhere." We're talking the catnip of broader sales opportunity here since it's supposed to make it possible for any applications certified for RHEL to be deployed as appliances on VMware ESX and Windows Veridian.

It involves a RHEL-derived, API/ABI-compatible Red Hat Appliance Operating System (AOS) and a Virtual Appliance Development Kit (vADK) so ISVs can configure the OS along with their middleware and appliance to create a complete system image. Then there's no extra development work - or so the theory goes. You just have to standardize on a single operating system.

Red Hat's got a bunch of pre-configured software appliances available for trial or purchase. It expects the AOS to be available the first half of next year. ISVs will do the selling and basic support.

Perhaps closer in is the private beta release of RHEL on Amazon's Elastic Compute Cloud (Amazon EC2) service, Red Hat's riposte to the on-demand software-as-a-service yen.

Amazon, it seems, has taken to selling time on its own utility computing-style data center to other people. And Red Hat has arranged to let Red Hat customers run any of their certified apps under the Red Hat Network management service there and buy whatever extra capacity they need. It will cost $19 a month per user plus 21 cents-94 cents an hour depending on the size of the instance plus bandwidth and storage fees.

Red Hat is the first commercially support operating system on Amazon EC2. It expects to move to a public beta by the end of the year.