Microsoft has acquired a start-up company called Calista Technologies and expanded its alliance with Citrix Systems, targeting VMware's early lead in virtualization technology.

Microsoft unveiled the news on Monday as part of a broader call to arms against VMware that includes adopting virtualization technology, which allows one computer to act like many "virtual" machines, across its core software lines. (For more from Monday's announcements, see "Microsoft reverses itself again on Vista virtualization.")

Virtualization is one of the most talked-about technologies in the software industry, because it disrupts the traditional business model that marries one machine to one piece of software like an operating system.

The technology allows companies to save on hardware costs by running existing equipment more efficiently.

Microsoft, the world's largest software maker, said it 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 Hyper-V virtualization feature in the upcoming Windows Server 2008 to work more easily with Citrix's XenServer product.

Read the original news article from CNET News, here.

Thanks to Richard Cardona for passing the news along.