If high-performance server virtualization means taking a physical server and basically chopping it up into lots of little servers, what do you call it when multiple physical servers are made into one virtual machine?

Well, you might call it ScaleMP, an SMP virtualization software start-up that has spent its infancy quietly lashing together off-the-shelf x86 servers into 1.5 TFLOP systems with 128 cores and a terabyte of memory sold by folks like SGI, VXtech, Flextronics and Dell.

Yes, by God, Dell… in the UK.

It has about 50 systems deployed in some places.

Now it wants to come up from under the radar and commoditize its Versatile SMP (vSMP) software – which replaces custom hardware and components – and create what it says is the cheapest four-socket machine on the market out of a matching pair of two-socket/quad or dual-core Intel 45nm Xeon 5400 or 5200 servers that share memory and are linked by Infiniband.

The price would run around 10 grand for a 16-core platform, something like a 70% saving over traditional SMP. It also claims a 25% saving on power and 50% of rack space.

ScaleMP argues that users don’t have to rip and replace, merely harness what they already have to get the benefits of scale-up as well as scale-out.

The software, which will only be available through VARs and systems integrators, costs $2,750.

The virtualization is in fooling the operating system into thinking that it’s dealing with a single four-socket machine rather than two twos and works best when the boxes are clones.

The advantage over classic clustering – aside from the hassle of setting a cluster up and tuning it – is supposed to be the lower cost of management. Classic SMP of course is just plain expensive.

The advantage in using entry-level two-socket machines is that that’s where Intel puts its best efforts and it’s easy to upgrade.

Intel is smitten with ScaleMP because ScaleMP kicks the stuffing out AMD’s Barcelona on SPEC CPU2006 integer and floating benchmarks – like 60% better on in and 12% on fp.

The same is true on dual-core where Intel is now ahead 30% on int and on par on floating point.

Needless to say ScaleMP is not supporting AMD in its commodity quest.

The new vSMP Foundation Standalone, which loads from Flash and runs between the motherboard and the operating system, currently works with Red Hat 4 and 5, SUSE 10 and Fedora 4 and above.

Any SMP application that runs on them should run on ScaleMP. They won’t care where their resources are coming from. ScaleMP can expand the memory space without adding processors and so increase performance without increasing cost.

The company expects to get Windows-certified in the second half of this year.

Along with what is essentially its emergence from stealth mode, five-year-old ScaleMP says it got an $8 million D round, reportedly its last trip to the well and an increased valuation from its C round, from existing investors Sequoia Capital, Lightspeed Venture Partners, TL Ventures and ABS Ventures.

The money, which brings total capitalization to $26 million, is supposed to go into expanding sales.

HPC systems now account for 26% if all processors sold in the server market and IDC projects they will be worth $15 billion by 2011. Of course the fastest-growing sector is for systems under $50,000.