Even though Gates and chief executive Steve Ballmer were coy with Wall Street, Longhorn is a key part of the company's financial future. Windows is one of Microsoft's main profit centres, and the company had planned to tie other software, including the next update of Office, to Longhorn's release. Microsoft has already scaled back those plans, however, saying for example that the next version of Office will work with older versions of Windows as well.
As for Longhorn's rollout, Microsoft said in April that it had pushed out the target for the software until the first half of 2006. A test version of the software has also been delayed until next year.
Matt Rosoff, an analyst with Directions on Microsoft, said: "2006 is what we're predicting" for the final release. "It's conceivable it could slip further."
Entertainment centre
For now, Microsoft is preparing a slew of new consumer products and services designed to spur sales of Windows XP, which debuted in October 2001.
The company is focused on making the PC more of an entertainment hub. Apple Computer has invigorated its own sales with its "digital hub" plan, and Windows-based PC makers are selling everything from plasma televisions to portable media devices. Hewlett-Packard, for example, is expected to soon unveil an HP-branded iPod.
For its part, Microsoft will soon announce its MSN Music download store and Windows Media Player 10, a new version of its jukebox software. The company also has been quietly preparing an update of Windows XP Media Centre edition, an entertainment-themed version of the OS that allows consumers to watch videos and view pictures via a remote control.
Microsoft started testing the new version -- code-named Symphony -- early this year. The company has sent the finished software to computer makers, with a goal of having the new version of Media Centre in PCs by October, according to a PC industry source. Microsoft declined to comment on the matter.
Besides enhancing the user interface, Microsoft is considering two steps aimed at making the Media Centre edition of the operating more widely adopted: lowering the price it charges PC makers for the software and removing the requirement that it ship with a TV tuner, an industry source said.
