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Well, it's not really free: you still need to pay a Windows Server license for each hypervisor.
Then you need to pay the hardware. And the support.

It's not free, it's just cheaper... but you get what you pay for, VMware's technology is much better than Microsoft's.

If you're interested in a cheaper virtualization enviroment check Red Hat:

You have a big name to give credibility to your project, a great technology under the hood (KVM probably beats even VMware on the performance side) and it's really free in small-scale scenarios when the open-source version is enough.