Mike Neil, Microsoft’s general manager virtualization strategy, confirmed in a blog post late last week that the company is delaying a number of features for a later release of Windows Server virtualization, including live migration and the ability to add resources such as storage and networking without disrupting the virtualized system.

The first version of Windows Server virtualization, codenamed Viridian and due for release within 180 days of Longhorn server, will also only scale to 16 processor cores, rather than the planned 64.

We adjusted the feature set of Windows Server virtualization so that we can deliver a compelling solution for core virtualization scenarios while holding true to desired timelines, wrote Neil. Windows Server virtualization is a core OS technology for the future, and we chose to focus on virtualization scenarios that meet the demands of the broad market enterprise, large organizations, and mid-market customers.

While Viridian might still meet the demands of the broad market, there can be no doubt that it has just lost some of its major selling points. It is no coincidence that the last time Neil blogged about Viridian, announcing that its public beta had been delayed to the second half of 2007, he balanced that disappointment with boasting about the forthcoming features.

We’re designing Windows Server virtualization to scale up to 64 processors, which I’m proud to say is something no other vendor’s product supports. We are also providing a much more dynamic VM environment with hot-add of processors, memory, disk, and networking, he wrote at the time.

The loss of the functionality is a significant blow as Microsoft battles with VMware, SWsoft, and XenSource, among others, to be the enterprise virtualization platform provider of choice.

On a more positive note, Neil maintained that a beta version of the remaining Viridian functionality will be available when the next version of Microsoft’s server operating system, codenamed Longhorn, is released to manufacturing in the second half of the year.