On Monday, Microsoft updated its plans for new virtualization software and said it will expand its lineup through an acquisition.

The company will begin testing its hypervisor software, developed under the code name Viridian, by year's end, Bob Muglia, senior vice president of Microsoft's Server and Tools business, told CNET News.com. The software will ship within six months of Longhorn Server, the next major release of the company's server operating system, due in the second half of next year.

Microsoft is also developing software to manage virtualized systems, Muglia said. Microsoft System Center Virtual Machine Manager, developed under the code name Carmine, will enter beta testing within 90 days. The software, which will work with Microsoft's overall systems management tools, is also slated to debut in the second half of 2007.

The software maker said it has acquired Softricity, a Boston-based software maker, to extend its reach into application virtualization. Microsoft's current virtualization software is designed to run multiple instances of Windows simultaneously. Softricity's tools let companies virtualize applications that run on Windows, such as Microsoft Office or other business applications, so that programs can be managed centrally and delivered over a network to desktop machines.