Microsoft said on Monday it bought a start-up company called Calista Technologies and expanded its alliance with Citrix Systems , targeting the fast growing virtualization market.

Microsoft's moves are part of a broader call to arms against the early leader VMware in the market for technology that allows a single computer to act like many "virtual" machines, thus expanding its capacity to run various types of software and multiple operating systems.

Virtualization is one of the most important developments in the software industry, because it disrupts the traditional business model, which marries one machine to one piece of software, such as an operating system.

The technology allows companies to save on hardware costs by running existing equipment more efficiently, while allowing companies to deploy applications faster without worrying that certain pieces of software will clash with one another.

Microsoft acquired Calista for an undisclosed sum. Calista designs technology that helps compress and deliver "virtualized" desktops running on a remote computer server.

Citrix is developing a software tool that helps Microsoft's new Windows Server 2008, which will incorporate virtualization technology known as Hyper-V, to be compatible with Citrix's competing XenServer product.

The two companies will also join together in marketing desktop virtualization, which separates a computer's desktop from its physical location.

Microsoft leads a pack of entrenched software makers including Oracle and Sun Microsystems looking to close the gap on VMware, the first company to commercialize server virtualization technology.

Microsoft plans to release Windows Server 2008 in February. Six months after that release, Microsoft plans to introduce Hyper-V, an extra software layer that sits between the hardware and operating system. It will compete with VMware's main server product.

By building virtualization into the operating system, Microsoft said it can offer customers virtualization capability for a third of the competitors' prices. Customers will also need to buy a Microsoft product called Systems Center Virtual Machine Manager to manage virtualized and non-virtualized servers.