instasai writes: Competition between VMware and Microsoft got a little tighter on Thursday with the release of Windows Server 2008 R2, which includes Hyper-V R2. The update adds important capabilities that help Microsoft close the functionality gap with VMware and other rivals. Hyper-V R2 ships free with Windows Server 2008 R2, although to get some of the new features, such as Live Migration, customers will have to purchase System Center Virtual Machine Manager. Hyper-V R2 can also take advantage of up to 64 physical processors, and allows virtual machines to be migrated between two servers. VMware may not be under threat just yet, however. In a study released in September, Burton Group said Hyper-V R2 is missing two of the 27 features it considers essential for running enterprise-class applications in production: the ability to assign run priority to each virtual machine on a server and support for multiple virtual CPUs when running Linux and Windows 2000 guests.