It seems like Microsoft is dropping their OneCare product line and repackaging it as "Morro", a free consumer AV product. I read the news on Graham Cluley's blog.
What does this mean?
This will of course eat from the pie of other vendors offering free products (AVG, Avira and Avast!). It will also get more people onto the "free AV" bandwagon because of name recognition ("No one was ever fired for buying
But will it make any impact?
In the short term - yes. In the long term - not really. As Graham Cluley correctly points out, if this gets a large user base, (professional) malware writers will test their "products" against it to ensure that it is not detected (as they do with other large AV products - this being a reason why you are probably better off with a lesser known AV company). This will devolve in a "disinfect not prevent" situation, where malware has the upper hand. I think code which disables Microsoft's "way in" to the PC's (kills Windows Update for example) will be present in more and more malware, making sure that once it got a foothold on the computer, it will remain there.
In the end all this will do is to take away some marketshare (and money) from other players in the AV industry. From a security point of view it won't make a difference.