Microsoft today announced plans to kill its Windows Live OneCare subscription-based security suite and replace it with a free anti-malware utility. Code-named “Morro,” the new product is being positioned as a solution for small form factor and lower power PCs, yet Microsoft says it will take advantage of the same core anti-malware technology that fuels the company’s current line of security products.

Microsoft will of course continue to honor existing 12-month subscribers of OneCare, but from the end of June next year it will stop accepting new sign-ups and begin the gradual process of winding down the service. In addition, Microsoft is also dropping its Equipt product announced just a few months ago and offering refunds to those who already paid for the software-plus-service bundle.

It’s a good thing that Microsoft wants to offer free software to protect PCs from viruses, though one can’t help but wonder how Symantec, McAfee and other anti-virus vendors will react to this offering. The company says Morro will be available as a free download for all users of Windows XP, Vista and the upcoming Windows 7, so as long it is not bundled with the OS they’ll stay clear of anti-trust lawsuits.