Red Hat never did like Xen.

It liked it even less after Citrix bought XenSource a year ago and Microsoft cuddled up with Citrix, Virtual Iron and Novell, Xen’s first Linux promoter. Among other things, it didn’t have control of the technology.

It became clear a few months ago when it introduced a KVM-based bare-metal Embedded Linux Hypervisor that Red Hat’s virtualization destiny was the jejune KVM and now it’s gone and bought Qumranet Inc, the Israeli KVM start-up that created the hypervisor, for a relatively modest $107 million in cash.

Red Hat claims the acquisition puts it on a par with Microsoft, the only other company in the world, it says, with a comprehensive virtualization portfolio integrated with the operating system that can drive virtualization costs down, something mere virtualization vendors like market leader VMware don’t have.

It says it intends to drive virtualization into every system, from servers to desktops, on both Linux and Windows.

Qumran’s SolidICE virtual desktop infrastructure (VDI) invention will give Red Hat the ability to run Windows and Linux desktops in virtual machines hosted on a central server and accessible through a browser.

Red Hat sniffs that the widgetry is purpose-built, “not simply a retrofit from server virtualization solutions.”

Instead of, oh, say, RDP, it uses SPICE, the Simple Protocol for Independent Computing Environments, which it claims overcomes “key barriers” to VDI adoption like performance and its attendant user experience.

Red Hat got IDC to say SolidICE makes VDI “viable for a larger set of users.”

Qumranet’s target market has always been PCs, which naturally makes it a threat to Microsoft. Microsoft bought Kidaro earlier this year to anticipate Qumran and others like it.

The virtualization market is still young even though Red Hat appears to be coming from behind.

Red Hat will have to get out from under Xen, which is now – however grudgingly – part of Red Hat Enterprise Linux. Heck, Xen was the single biggest new feature in RHEL 5 when it was introduced a year ago March so it will be a phased withdrawal. KVM needs work and Red Hat has to honor its seven-year support promises.

It says it’ll support the KVM-incompatible Xen at least until 2014. It also claims it will continue to contribute to Xen development.

That may be so it has a fallback position.

KVM, which stands for Kernel Virtual Machine, approaches virtualization differently than your classic so-called standalone hypervisors like Xen and VMware and invites an architectural debate over whether or not the virtualization engine should be part of the operating system kernel like KVM is.

KVM has part of the Linux kernel since 2006 and a counter-culture Red Hat would argue that the two can evolve seamlessly together.

Qumranet, by the way, takes its name from the site where the Dead Sea Scrolls were found in 1947. Its staff and management team including CEO Benny Schnaider, president Rami Tamir and CTO Moshe Bar will be joining Red Hat and the three-year-old 65-man company is supposed to be Red Hat’s R&D center is Israel.

Red Hat doesn’t expect Qumranet to contribute much at all to revenues this fiscal year but figures that next year, which starts on March 1, it will be able to kick in about $20 million, roughly $3.5 million-$4.5 million a quarter. It said the acquisition will cost it five to six cents a share this year.

Qumranet raised about $20 million in two rounds from Sequoia Capital, Northwest Venture Partners and Cisco as well as its founders, all serial entrepreneurs.

Hmm, now what will Canonical do considering Ubuntu supports KVM as well as VMware?