Matching VMware tit for tat, Microsoft Monday cut the anticipated price of its standalone, OS-detached, hypervisor to zip, zero, nada.

When released sometime in the next 30 days, Hyper-V Server 2008 will be free for the download and can be used to consolidate both Windows and Linux workloads onto a single physical server.

Microsoft previously said the standalone widgetry would cost $28 a head.

The hypervisor is already bundled for free in Windows Server 2008 Hyper-V, which inspired VMware to make its standalone ESXi hypervisor free last month as bait to move users up to its flagship Infrastructure 3.

Microsoft cut the price tag as it kicked off a saturation campaign on behalf of its virtualization mojo that it calculates will reach 250,000 customers and partners by the time it ends.

Microsoft also gave the first public demonstration of Live Migration in Windows Server 2008 R2 Monday, an upgrade that’s not due out until 2010.

Microsoft said the Live Migration feature would be in the next version of Hyper-V Server too.

Missing the feature, which Microsoft pulled from its original wish list to get Windows Server 2008 Hyper-V out, has weakened Microsoft’s virtualization position as far as critical apps go.

Live Migration uses the hypervisor and the high-availability features in the server operating system so customers can move running applications between servers without shutting down to accommodate changing, dynamic computing needs across a data center.

Microsoft lightened up on its virtual migration rules September 1 and said big customers could move Microsoft virtualized server apps between servers as often as they wanted without paying additional licensing fees.

The company also promises its expected System Center Virtual Machine Manager 2008, another key catch-up to VMware, in the next 30 days.

It will let customers configure and deploy new VMs and centrally manage their infrastructure, whether running Windows Server 2008 Hyper-V, Virtual Server 2005 R2, Hyper-V Server 2008 or VMware’s prized Virtual Infrastructure 3.

Last week Microsoft released Application Virtualization 4.5, which lets Vista users stream resource-heavy applications to the desktop.

It’s supposed to eliminate potential software conflicts while giving IT managers centralized control.

Application Virtualization 4.5 will be part of Microsoft’s Desktop Optimization Pack 2008 R2, due sometime in the next few weeks.

Microsoft says server OEMs report nearly 100% of Windows Server 2008 orders include Hyper-V.

Oh, yes, and Amazon.com is testing Hyper-V.

• Virtualization Unlocks Cloud Computing: Gartner