The short version: Get Xen

GPL free software for IA-32 (x86, x86-64), IA-64 and PowerPC 970. Supports BSD, Linux, Solaris, Windows and a bunch of rare stuff.

http://en.wikipedia.org/wiki/Xen

The long version: Lots of free VM options
http://en.wikipedia.org/wiki/Comparison_of_platform_virtual_machines

"Hyper-V Server R2 is 100% OS dependant Hyper Visor and free http://www.microsoft.com/hyper-v-server/en/us/r2.aspx."

I meant OS independent.

"Microsoft has learned from its success in using ads to tell the world plus dog that Apple is expensive" I really don't see why that campaign was a success since Apple reported record earnings and Microsoft reported record loss in the same period and under the same economical crisis.
ESX licenses are very expensive once you buy symmetric license, but VM ware works a lot better and more stable that Virtual Server from Microsoft.

MS's "free" virtualization technology depends on a specific feature of newer AMD and Intel CPU's. While most newer AMD chips have this feature, many Intel chip's do not, even in computers targeted for business. So, you might need to buy a whole new computer in order to actually use this 'free' feature.

Beat me to the punch Juan...

Paul - Windows 2k8 core reduces attack surface and system usage significantly.

Also your comment about Microsoft never giving away anything free?

Virtual Server 2005 has been free since...well - about 2005

I could probably name a bunch of other Microsoft software thats free, but right now is coffee time.

Hyper-V Server R2 is 100% OS dependant Hyper Visor and free http://www.microsoft.com/hyper-v-server/en/us/r2.aspx.

You could also do an install of server core and add the Hyper-V role. This way you get at least one free guest license if you want to run server 08. The patches are greatly reduced.

In my opinion, Microsoft is at least partially right here. VMware licenses ARE indeed quite expensive. And no, you cannot do without the expensive licenses if you want to have the "good" features, like automatic failover, backup, live migration of VMs from one server to another, and so on.

For example, if I go to the DELL UK site now, and order a reasonably nice PowerEdge R710 (Nehalem, 72G RAM), the base price will be approximately £3,300.

If you want VMware ESX 4 on that, you'll have to cough up £3,070.00 for a three year (the usual lifetime of such a box) 'standard' license, £5,490.00 if you want an 'advanced' license, and £8,650.00 (!!) for an 'enterprise' license.

So the price of ESX is quite high, compared to the cost of the physical box. Not to mention you will have to purchase a separate machine to handle the VirtualCenter service, costing you another sweet £8,080.00...

It is almost cheaper to buy separate servers instead. ;)

VMware has been giving away what it was previously selling. VMware server is now free. As is ESX-I that can run off a flash drive. ESX allows the hypervisor to run with little resources and little storage space. Another benefit is the reduced attack surface.
Who is their right mind is going to to put a big fat Windows Operating system underneath the hypervisor? This will only require patching and downtime for no discernable benefit. You've how to run an instance of Antivirus on hypervisor OS too - what a waste of resources.
Microsoft knows that if they didn't get Hyper-V going lots of enterprises would start playing with the likes of ESX (and other products), start playing with Linux in Virtual machines and then wonder why they are running Microsoft t servers given the cost, complexity and headaches.
Like I said - VMware is only expensive if you buy one of their products - they have free products. Microsoft has no 'free' product' - you have to buy a windows server to get their virtualization solution. Not only that but they'll then put restrictions on what you can do with it.