Microsoft is now giving away its Virtual Server R2 virtualisation platform.
The platform can host multiple virtual machines running either Windows or Linux. Virtualisation helps companies reduce their hardware costs.
The decision to offer the product for free will put pressure on virtualisation market leader VMware.
When launched in 2004, Virtual Server cost up to £580. In December 2005, the top price was reduced to just £115.
As part of the move to free downloads of the product, Microsoft is axing the Standard edition and is now only making the Enterprise edition available.
After the previous Microsoft price reduction, Vmware responded by making one of its products free.
Microsoft has admitted its move to free downloads is partly in response to VMware’s free product.
It was recently announced that Microsoft will be late in releasing Service Pack 1 of Virtual Server R2.
The service pack was previously expected by the end of this year, but the release date has now been put back to January 2007.