I first picked up on it here, but the news is that Microsoft are delaying Virtual Server 2005 R2 SP1 until 2007 - with no firm date in that year.

As the Ars Technica piece mentions, Microsoft have already tried to grow market share by lowering the cost of their products, while VMware have just released their two key products - VMware player and VMware server for free.

Virtual Server is still my favourite solution for virtualization because of the security aspects, and the new release has some useful features, like live backups, as part of the feature set. I'll happily wait, but the delay makes me uneasy.