Microsoft is offering their Virtual Server R2 free to support linux guests. Read the full article here.

Looks like they are going to go heads up with VMware and Xen. Microsoft has more than 5,000 virtual server clients and 45 ISVs supporting their Virtual Hard Disk format including XenSource, Brocade, BMC, Diskeeper, Fujitsu-Siemens, Network Appliance, Softricity and Virtual Iron.