It looks like Microsoft is starting to eat its own dogfood so to speak.  What could be considered a cousin to the virtual appliance is now making its way out of the Redmond campus.

Microsoft is offering a pre-release of its Microsoft Visual Studio Code Name "Orcas" (its next generation development tool for Windows Vista, the 2007 Office System and the Web) in the September Community Technology Preview (CTP). 

This time, Microsoft is making the CTP available only as a Virtual PC image.  In order to use it, you'll need to download either of Microsoft's free virtualization platforms, Virtual Server or Virtual PC. 

One of the problems with virtual appliances and Microsoft has been the whole issue of the Microsoft operating system licenses.  We've been wondering, when will this change?  Could this be a preview of that?

The required software listed for the Orca CTP is Virtual PC or Virtual Server and the Orca base image which says it contains the OS and a one-time download for all the Virtual PC images that lay on top of it.

Microsoft also adds this note:

Before you install: This CTP is released as a Virtual PC Image. By using a VPC image, developers can run the CTP on a machine without impacting any existing software installations. The CTP can be removed by deleting the folder and using the Virtual PC application to remove the configuration information.

This image ships with networking set to “local”. This setting enables the virtual machine to think it is connected to a network without actually connecting and exposing the machine to the Internet. We recommend that customers do not modify the networking settings. Customers who wish to turn networking “on” to connected the image to a physical network are advised that they will need to ensure the security of the virtual machine as well as apply any security updates that may have become available since the release of this image.
This CTP image requires the use of Microsoft virtualization products, either Virtual PC 2004 SP1 or Virtual Server 2005 R2. Both these products are freely available from the Microsoft website here.

This CTP is available in English only.

Thanks to Richard Cardona for letting me know about Orca and it's delivery mechanism.