I've been using MSE on several systems since the beta was released in June, and have been very impressed. The software is unobtrusive and thrifty on system resources. MSE is based on the same engine as Microsoft's corporate Forefront antivirus client. That product performed very well on a recent Virus Bulletin test. In that same test, several major antivirus companies failed because they did not detect prevalent threats that are in the wild. Why pay for an AV solution that fails when you can have a good one for free?
So, if Microsoft is offering good security software to all users for free, the entire Windows world should be much less susceptible to widespread epidemics. Who could object to that? All the people who profit from the status quo, of course. That includes not only the big security companies like Symantec and McAfee, but the big computer makers that bundle one package or the other with their PCs and are paid handsomely to do that. Renewal prices for security suites run about $70 a year, so there is plenty of money to go around in those deals.
Since MSE doesn't provide enterprise-wide management and reporting features, it's really for homes and very small businesses. No doubt, Microsoft is hoping that not only can they clean up the Windows ecosystem with MSE, they can also use its success to sell more of their Forefront security software.
MSE threatens a profitable third-party consumer software category, but you're not likely to see computer makers give up on their antivirus deals so easily. Yet I've never been comfortable with security being an optional bolt-on option to Windows; it really needs to be built in and not sold at an inflated cost. Too many non-techie users don't run antivirus due to ignorance, or are just totally frustrated by pricey and resource-hungry commercial antivirus packages. Free is the right price for an antivirus package for your mom, especially for a package that works. For now, at least, you'll need to download it yourself because it's not being bundled with Windows.