VMWare's vSphere 4 cloud operating system will allow solution providers to bring virtualization to their small and midsize business customers for as little as $166 per processor.

While large enterprises have been the traditional target for solution providers bringing instant ROI with virtualization deployments, SMBs have focused on using the technology for business continuity and high availability, says Joe Andrews, VMware’s SMB Group product marketing manager.

"For large enterprises you get immediate ROI," Andrews says in a statement. "For SMBs, [virtualization] is still compelling, but with tens of servers rather than hundreds, the numbers don't add up as quickly so the focus has been business continuity and availability," he says.

VMWare’s vSphere 4 has an entry-level price point of just $166 per processor, which allows SMBs to consolidate servers without breaking the bank while still enabling the benefits of business continuity and high availability.

Beyond the price point, VMWare has also announced specific disaster recovery and business continuity solutions based on technology from disaster recovery service providers SunGard and BlueLock.

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Despite interest from solution providers and SMB customers, VMware doesn’t expect vSphere 4 to make a significant revenue contribution in the short term, says Paul Maritz, VMware’s CEO.

Maritz, who assumed the role of CEO in July 2008, says vSphere is one of a number of strategies to drive new revenue. Other initiatives include putting hypervisors on desktop computers, as well as in mobile phones and handheld devices.

The hope is that vSphere will boost revenue by attracting existing customers looking to better manage their hypervisors or attracting new customers to use VMware hypervisors.

If successful, the new software could drive greater investment in VMware technologies, said Tim Klasell, an analyst at Thomas Weisel Partners in a recent research note.

"vSphere's going to have a very profound effect, but it's going to take ... several months for it to fully work its way into the marketplace," Maritz said during a conference call this week. "So we don't expect any dramatic near-term effect on our revenue stream," Maritz says.

The launch of vSphere 4 comes as the virtualization giant struggles to find new revenue streams, industry analysts say. Sales of its core hypervisor have slowed as the market matures and competition from Microsoft’s HyperV is growing.

VMware has already issued a revenue warning based on slowing sales of hypervisor software, and in January the company said it expects its first sequential revenue decline in the fourth quarter.