Access databases are relatively inexpensive but they place limits on database size and performance for many users.

SQL Server provides much higher size limits and much better performances, supporting almost any number of concurrent users, but it can be very expensive.

Unfortunately there are some non-trivial differences between the way you program with Access databases and SQL Server. That means you cannot write an application using Access and then easily upgrade to SQL Server if necessary.

Enter MSDE (Microsoft Data Engine). MSDE is a restricted version of SQL Server. It has some size limitations similar to those of Access databases but the data model is the same as SQL Server's. That means you can build your application using MSDE and then easily upgrade to SQL Server if necessary.

MSDE is available for free if you have one of several products including Access, SQL Server, Visual Basic 6 Professional or Enterprise editions, or almost any other development product (C++, J++, Visual InterDev, FoxPro). MSDE is also included in the Visual Studio.NET Beta and Microsoft sources say it will be included in all editions of Visual Studio.NET.

It looks like this is Microsoft's plan for small databases in the future. Get more information, check availability, and download MSDE here.