The short answer is yes. You’ll probably save some money in doing that too. But remember that this version of SQL is limited to a 4GB database. Virtual Machine Manager 2008 does not need a huge database. It’s pretty lightweight. However, the VMM team has stated that once you start increasing the numbers of hosts being managed by VMM you need to monitor database size to plan a move to a full blow (Standard or Enterprise) version of SQL Server. The number they mention is 150 hosts. For 99% of us, that’s a huge number of hosts. I suspect only the fortune 500’s will have to worry about this issue.