That revision, code-named Longhorn, one of the most difficult and complicated in the company's history, has fallen further behind this year, as Microsoft shifted developers from the project and onto Windows XP Service Pack 2, which took longer than expected. Now the company faces the task of getting Longhorn under control and making XP seem fresh during a longer-than-usual wait between operating system updates.
"SP2 was a major milestone for the Windows development team," the company said in a statement Wednesday to CNET News.com. "Now that it has been released, it is a natural time to revisit Longhorn priorities."
With SP2 shipped and Longhorn still in development, Microsoft faces three major challenges: how to market XP this holiday season, what to do in the years before the next major operating system release, and what changes to make to Longhorn, if any, to ensure a timely update.
The answers could have a significant effect on consumers, partners and even investors, since Microsoft dominates its industry. Although the technology behind Longhorn has drawn praise, the long wait for the update has raised some concerns. Major partners, including Intel, have worried about the lag time between major operating system updates.
Many investors have expressed concern about whether Microsoft can release new software fast enough to spur the company's growth, as well as that of Microsoft-dependent technology companies. In the meantime, Linux providers and other companies with innovative technology, such as Google, are making inroads.
Although Microsoft Chairman Bill Gates was enthusiastic when unveiling an early version of Longhorn at a developer event last October, he has been largely mum in recent months. "We're not saying much new about Longhorn today, it's fair to say," Gates told financial analysts during a meeting last month at Microsoft headquarters.
