Citrix is going to try to bar VMware from getting its hooks deep in the cloud by developing the open source Xen hypervisor, already used by public clouds like Amazon, into a full-blown, cheaper, non-proprietary Xen Cloud Platform (XCP).

It intends to surround the Xen hypervisor with a complete runtime virtual infrastructure platform that virtualizes storage, server and network resources. It’s supposed to be agnostic about virtual machines and run VMware’s, which currently run only on its own infrastructure.

The announcement will be made Monday in VMware’s own house at the kickoff of the VMworld conference in San Francisco where VMware is expected to show off its new vCloud Express.

In varying degrees Oracle, HP, Intel, Novell, Dell, Fujitsu, AMD, NetApp, Juniper Networks, Eucalyptus Systems and GoGrid are backing the effort to realize a complete open source cloud-optimized Xen virtual infrastructure platform with easy interoperability between enterprise internal clouds and the external clouds like Amazon and Rackspace.

The platform promises the security, availability, performance and isolation across both private and public clouds that the enterprise demands.

Service providers are expected to use the Xen Cloud Platform, with its promise of no vendor lock-in, to deliver customizable multi-tenant cloud services that are supposed to work seamlessly with the virtualized application workloads customers are running in their internal data centers and private clouds. The applications will need no modification.

Citrix, the VMware wannabe, has contributed its already free XenServer to the cause, which will be orchestrated – at least nominally – under the re-chartered Xen.org.

It is also throwing in proprietary Citrix code such as XenMotion, which moves virtual machines from server to server without service interruption for zero-downtime server maintenance and balances available compute power within a pool of physical servers.

The widgetry includes server pooling and multi-server management, shared storage, dynamic data center provisioning, snapshots and it proprietary virtual switch.

Simon Crosby (pictured above at a SYS-CON.TV Power Panel), the former CTO of XenSource, which Citrix acquired in 2007, and now the CTO of Citrix’ Virtualization and Management Division, expects Oracle and Novell to make “substantial contributions” but didn’t say what.

Red Hat, of course, is pursuing a contrary path with the KVM hypervisor.

Crosby figures KVM is four years behind. It isn’t a product yet, merely a “technology without a whit of infrastructure,” he said and taking another crack at Red Hat warns that open source in its hands – with the changes it makes – effectively becomes proprietary code.

The new XCP widgetry is supposed to see standards-based virtual appliances that can be moved between public and private clouds; a federated compute capacity that simplifies moving application workloads between virtual data centers and disparate cloud service providers; standardized virtualization management; rich virtual networking capabilities providing per-tenant network management, intrusion detection, firewalling, routing and load balancing; and cloud-scale virtual storage so virtual machines and their physical storage can be widely separated without disrupting application performance.

The project will not include independent new management and orchestration offerings in the expectation that existing ones or those in development will suffice.

There’s supposed to be a stable, well-defined public API.

Crosby says the Burton Group rates the scope of the product to VMware’s VSphere 4, a comparison that can’t be made using Microsoft’s widgetry, which lacks the features. First fruits are expected sometime in Q4.

Xen has already amassed a following. According to Crosby’s count, 20% of the public clouds are built on it now and 10% of the Fortune 500 and Global 2000 are using it internally. It gets 10,000 downloads a week.