Microsoft on Monday said it is teaming up with Linux supplier XenSource to allow computers to run the upcoming version of Microsoft's Windows server operating system on computers that are simultaneously running Linux software.

In the latest sign that it is dropping its resistance to Linux, Microsoft of Redmond, Washington is teaming up with Palo Alto, California-based XenSource to compete with VMware, now the biggest supplier of so-called "virtualization" software.

VMware, also based in Palo Alto, is a unit of EMC Corp. . and helped pioneer the market in which computers can be used to simultaneously run multiple operating systems.

Virtualization software functions at a more basic level than operating systems such as Windows or Linux to allow fundamentally different software programs to run on the same microchip. This allows more tasks to be run on each computer, cutting overall hardware costs for businesses.

Microsoft and XenSource said in a joint statement that they will cooperate on the development of technology that makes their respective "virtualization" software programs work side-by-side on the same computer.

As a result of the collaboration, the next version of Windows Server, code-named "Longhorn," will provide customers with a virtualization system that promises to help run both Windows and Linux on the same machine more cost-effectively.

Microsoft said it expects to conduct a public trial of Windows Server virtualization by the end of this year and to release a commercial version of the software within 180 days of the date when Windows Server "Longhorn" is released. Microsoft aims to release "Longhorn" by the end of 2007, it said.