This article will discuss the differences between VMware Server and Microsoft Virtual Server. These differences demonstrate why VMware Server is still quite popular despite the fact that Microsoft's product is now freely available.
Extended device support
VMware allows a broader range of devices to be recognized by the guest OS -- mainly USB-connected devices that are plugged into the host computer. Neither Virtual PC nor Virtual Server can do this. That makes it difficult to use software in emulated operating systems when circumstances require, for instance, a USB dongle or even a device like a scanner.
It's been said that Virtual Server does not support audio devices, although Virtual PC does. This is only partly true; you can get audio from a Virtual Server machine if you connect using Remote Desktop and enable local mapping of sound. What's not supported, however, is audio through the default Virtual Server remote-management interface.
Cross-compatibility with other products
VMware has made a point of advertising how its system can mount and launch not only Virtual Server / Virtual PC virtual machine files and disks but also Symantec LiveState system-recovery files. Virtual PC and Virtual Server can only mount and launch their own virtual machine files or standard .ISO disk images. This creates a kind of one-way-door effect; people can migrate easily to VMware from Virtual PC, but not as easily the other way around. It is possible to migrate the other way with some work (and this probably ought to be explored in detail), but the process is nowhere near as convenient.
Note that Virtual Server and Virtual PC have a certain degree of cross-compatibility with one another. They are not entirely interchangeable (and are not meant to be), but Virtual PC machines can be migrated to Virtual Server in a fashion.
Source code availability
VMware has a fair amount of source code for its products available for immediate download. VMware Player has been open-sourced for both Windows and Linux, as has modified source for VMware Server and VMware Workstation.
Microsoft Virtual Server and Virtual PC do not have source code available (at least, not readily), but on the plus side, the virtual hard disk and virtual machine specification formats used by Virtual Server and Virtual PC are openly documented. In theory, anyone can create virtual machine or virtual disk files without specific tools.
One of the more convenient things VMware has done is supply users with a slew of pre-created virtual appliances -- downloadable virtual machines that run under VMware and which perform specific tasks. Among the most popular are editions of Ubuntu Linux 6.06 Server, SpamTitan, the Vyatta open source router and a number of other dedicated virtual machine installations.
The closest thing to this in Virtual Server is using a pre-built, live-CD .ISO for a given program. But the virtual appliance system makes it possible for the whole thing to be promoted to a full running installation with very little work. Creating explicitly pre-built virtual machines for Virtual Server wouldn't be impossible, but there seems to be little interest in doing so -- at least on Microsoft's part.
Multiple processor support
VMware currently has support for virtual SMP when the host has SMP as well. VMware currently considers virtual SMP experimental, but Virtual Server doesn't support SMP in guest operating systems at all.
None of the above differences preclude the possibility that the next iteration of Virtual Server will support those features. But, for the time being, those differences go a long way toward explaining why VMware remains popular in the face of ostensibly stiff competition.