VMware is scheduled today to announce the industry’s first cloud operating system ahead of delivering the thing sometime before the end of June.

Branded vSphere 4, the expected widgetry, which promises a 100% virtualized cloud, is meant to reinforce VMware’s virtualization leadership and push it out further ahead of Microsoft, which is nipping at its heels.

VMware has, for instance, segmented the stuff so that the low end is now priced considerably lower than its current generation to attract SMBs lest Microsoft pick them off with its “freeware.”

Meanwhile vSphere’s feature-packed upper end will court the enterprise and the hosting service providers.

vSphere is the basis of what VMware calls a private cloud and defines not just as an internal cloud but rather as an internal cloud federated with an external cloud or clouds for added capacity.

VMware CTO Steve Herrod keynoting Virtualization Conference & Expo in New York City

The company’s pro-cloud argument is that the way things are 70% of IT budgets are spent just keeping the lights on, with 42% going to infrastructure maintenance and another 30% to application maintenance. It claims vSphere can up the percentage available for innovation and competitive advantage.

It says vSphere can cut capital and operational costs by over 50% for all applications. It also claims its management capabilities can save six month’s worth of an administrator’s time running an environment of 100 virtualized hosts.

To make its point about cloud economy VMware says that if its installed base went over to vSphere what it saved on power in a year would be equal to all the power Denmark consumes in 10 days.

vSphere is supposed cut IT costs over and above what was possible with VMware’s current Infrastructure 3 flagship. It describes the different in saving between generations as “transformative.”

It says to figure about a 30% increase in consolidation ratios, decreasing infrastructure costs per application; up to 50% savings on storage; and a 20% savings kicker on power and cooling.

VMware says vSphere, which will replace Infrastructure 3, takes charge of the whole data center, aggregating and managing large pools of infrastructure – processors, storage and networking – as a seamless dynamic operating environment.

It says it doesn’t matter what the gear is so long as its x86. It also doesn’t much care what the guest operating system is – vSphere will support 24 of them to Microsoft’s six – or what the application stack consists of.

A single logical resource pool or cloud-scale “compute plant,” as VMware calls it, can stretch to 32 physical servers with up to 2,048 processor cores, 32TB of RAM, 16PT of storage, 8,000 network ports and 1,280 virtual machines.

And vSphere virtual machines are also supposed to be more powerful than last-generation VMware virtual machines.

Each one can, for instance, support 2x the number of virtual processors for a total of eight; 2.5x more virtual NICs for a total of 10; 4x more memory, up from 64GB to 255GB; 3x the network throughput; and 2x the maximum recorded IOPs pushing the max to over 200,000.

VMware claims that a single VM can handle 5x Visa’s annual global payment processing traffic. vSphere is also supposed to be able to handle eBay’s daily web traffic on a single server.

VMware claims that any application, meaning both existing enterprise apps and next-generation apps, will run more efficiently on the stuff and with guaranteed service levels.

It says even resource-intensive apps like large databases and Microsoft Exchange can be deployed on private clouds.

The widgetry includes zero-downtime/zero-data loss fault tolerance – thanks to a shadow copy on another server in the cluster – disk-based backup and recovery, application-level security policies and a vNetwork Distributed Switch to oblige Cisco that’s supposed to make networking easy to configure and provide visibility inside the box.

vSphere is also supposed to future-proof users. Infrastructure 3 could reportedly support up to six physical cores on a processor. vSphere should be good for 12 when and if that happens in its lifetime.

VMware’s carved vSphere up into six editions, each with successively more functionality, starting with a low-end vSphere Essentials priced at $995 for three physical servers, or $166 per processor.

Essentials is followed by the $2,995 Essentials Plus, which covers the same three servers but adds high-availability and data protection.

It’s supposed to be the only virtualization product that provides built-in availability, data protection, patch management and customizable alerts and reports at the price VMware will be asking.

The higher-end data center widgetry runs $795 per processor for vSphere Standard, $2,245 per processor for vSphere Advanced, $2,875 for vSphere Enterprise and $3,485 per processor for the full-blown Enterprise Plus with all the latest bells and whistles.

With Infrastructure 3 the entry point started at $495 per CPU and topped off at $2,875.

Infrastructure 3 customers with valid support and subscription contracts can upgrade for nothing. VMware is interested in moving its installed base onto the new widgetry. So it’s offering time-limited promotions for existing Infrastructure 3 to upgrade to vSphere editions over and above what they’re entitled to under their contracts.

VMware says that to get the whole megillah up and running would take three-six months in a data center considerably advanced down the virtualization path but it only knows that anecdotally.