I had the pleasure of visiting (mt) offices last month as I was in the area and have been a long-time vip program customer. They talked with me about this (xv) for quite a bit. Here's what it's about:

Targeted at smaller design firms/consultancies - the 37s crowd that likes productivity. They will be able to do iChat, iCal, use collaborative wiki/blog software built-in and back up with time machine, etc. The huge thing for me is the server admin application that makes it incredibly easy to administer/maintain/manage the box from any mac... just a great UI for those that don't necessarily want to always have a terminal open.

So, why can Leopard server be virtualised, but the desktop version can't be?

I run VMware on XP so I can use whatever *nix I want at the time. I'd love to be able to use OSX that way, but Apple won't allow it. This drives me nuts. I'm fairly platform agnostic. But, people used to complain about Microsoft not being open. Why aren't more developers making noise about this?

Because the license for Server permits it, and the license for client does not.

It was more of a rhetorical question than technological.

Virtual Leopard -> VDI -> thin clients -> fewer Macs sold.

Is this mainly for people who want to run iCal or iChat servers? What advantage does this have over the standard Linux webserver?

One advantage I can think of is access to a pretty good speech engine - with Linux, you have to pay for something of reasonable quality (eg Cepstral voices).

The value is being able to run programs that can only run in Mac OS X. There are plenty of reasons why you might want to do this. You might want to build some custom processing job that relies on something built on top of OS X for example. There are at least two YC companies that have done this.

One advantage is for people who already use Leopard on their primary computer, and don't want to bother with a subtly different flavor of *nix.

Do you mean the command line differences? Or will people who use this effectively screen-share the Leopard server and see it "as is." I know very few developers who demand that.

I mean command line differences.

IMHO this is a PR stunt... there's no real benefit to using a OS X server instead of FreeBSD or even Linux... if I'm wrong, please enlighten me as to any tangible benefits to using Leopard purely as a webserver...

Who said anything about "purely as a webserver"? There's iCal, iChat, wikis, Open Directory, etc.

Depending on the price, it could be a reasonable option for people who want a place to do some porting or qa work on OSX but otherwise do most their development on some other platform.

This service will probably be over $100/month; for development purposes a Mac mini would probably be a better option.

Their website says During the Private Beta period we intend on splitting the server in 1/8th partitions. Each virtual machine will be guaranteed 2GB of memory and two cores of CPU resources.

That sounds close to a small ec2 instance 1.7 GB of memory, 1 EC2 Compute Unit (1 virtual core with 1 EC2 Compute Unit), 160 GB of instance storage, 32-bit platform

So if you have to pay by the month a Mac mini could be better, but if you pay by the hour I could see using one for an hour or so a day as a build slave.

Unlike an EC2 instance, though, these are going to be running on expensive, single-vendor hardware, and won't be able to take advantage of much higher-density blade configurations to decrease space, power, and cooling requirements. There's also the matter of a non-trivial per-image OS license cost from Apple.

In other words, expect to pay a premium even over what you would for a normal full-time VPS, and don't count on hourly billing.

to me this only becomes attractive a few years from now, when Snow Leopard + ZFS is out