Microsoft's intent to release free anti-virus software has been known for as long ago as 2004 when Microsoft bought out GeCad and Pelican Software.
Microsoft also purchased Giant Antispyware (which was generally considered to be a good product at the time) and later became Windows Defender, as well as being built into Windows Vista by default.
Microsoft previously had Windows Live OneCare, a paid subscription security suite including extras like parental controls and photo backup, but discontinued the product possibly due to user and industry-wide criticism of the product, and that Morro was already on the horizon.
Microsoft's Security Essentials however takes a different approach to Microsoft security products of the past, and bucks the trend of competing anti-virus products: it's lightweight.
MSE has been praised for it's low resource usage and small installer (just 7MB for the whole thing, and no--that's not a stub downloader; it really is just 7MB). Microsoft are targeting a worldwide market with MSE, for those who cannot afford the likes of Norton or McAfee and also those on dial-up connections. MSE is available in 20 markets, in 10 languages.
Reactions from competitors varied. Some thought it to be no threat to them, some thought that it raised certain anti-trust issues (though Microsoft will not be bundling it with Windows), and AVG welcomed the move as indicative of the need for free anti-virus solutions. In some places, a Norton subscription is the equivalent of a month's wages--between virus scans, people do need to eat.
Personally? Well, much could be said about 'providing the poison and the cure', but I have to commend Microsoft. This is a genuinely good product that is light on resources. I am sick to death of bloated, spammy and frankly useless anti virus products. Even my favourite free product AVG is becoming large and unwieldy. The installer is 65MB, and the beta editions of the upcoming version AVG 9 weigh in around 90MB.
It really is time people got control of their machines back from these AV vendors, and MSE is the first product of its kind that I've seen that makes a real concentrated effort to do that. As a person fixing machines all day, thank you Microsoft, thank you.