Microsoft's Virtual Machine Licensing FAQ's

Virtual PC has been around for several years, mostly for Mac users to emulate Windows, but after Microsoft bought Connectix ~2 years ago, more emphasis has been placed on using the VPC to emulate other operating systems on a Windows host. MSDN subscriptions have also included VPC and it has been a huge timesaver. Now Ballmer's announcement confirms that Microsoft recognizes virtualization as an alternative to OS lock-in and:

They're not going to turn their backs on customers just because they don't like Linux

--Yankee Group's Laura DiDio

Competitors:
EMC's VMWare
SW-Soft