The new security offering code named "Morro" is based on Microsoft's malware protection engine and it is slated for release in the second half of 2009.
It's a very good move by Microsoft to protect its customers against malware. But I can't help but wonder how Symantec, McAfee and other anti-virus vendors will react to this "no-cost" offering. As long as Microsoft doesn't bundle "Morro" with their OS they'll be safe from anti-trust lawsuits, but offering it for free might bring down the cost of other commercial offerings.
They will be discontinuing "Window Live OneCare" effective June 30 2009 in an effort to keep things simple and less confusing for customers.