I don't usually delve into my work life but it looks like a part of it is making news: Virtual Server is now free and we finally support redhat linux distros as a guest both with optimizing additions as well as tech support. Linux used to always work on VPC and Virtual Server, but now it is supported officially. Details are in the Microsoft announcement and the PC World article. It took a while, but we got that door opened. Well, now back to the hypervisor.
It was inevitable, I think, with VMware Server (as well as VMware Player) becoming free-as-in-beer. Presumably Hypervisor will be positioned against ESX Server?
Virtualisation is a Good Thing: I've used VMware since (just) before the release of version 2 and I couldn't work without it - I'm excluded from your world by using a Linux host. It's the only sane way to test sites against multiple versions of IE, and I'm currently replicating a customer's SQL Server/IIS setup for development which is a damned sight less hassle than setting up real Windows boxes for the purpose.
Yes, the test/dev scenarios are great virtualization candidates (whomever's VMM one uses). I think the free (or no-charge) changes from Vmware came out of having to deal with xen. Commercial xen is turning out to be an interesting competitor for all of us. The hypervisor is positioned against xen and frankly we think virtualization should be part of the general OS and services offering, hence the hypervisor is part of the (sorry, marketing buzz alert) "Longhorn wave". That's one reason why our virtual hard disk (VHD) format is a no-charge license. I am happy to see vmware is following suit with their virtual image format.
I've not tried Xen yet - there's some temptation to use it to split services into different VMs on our servers, but without any actual need to do so, I'm being good. It'll certainly be interesting when they release Windows client support...