Online Extra: How Microsoft Is Clipping Longhorn

To get the already-delayed follow-up to Windows XP out the door by 2006, it has decided to omit some of the most ambitious features

Never in its history has Microsoft (MSFT ) had to wait so long between Windows releases. When Windows XP launched in October, 2001, researcher Gartner Inc. expected the software giant to gin up a new version within two years. But Microsoft's ambitious follow-up to Windows XP, code-named Longhorn, has bogged down in delays. The company rarely discloses timelines for products, lest it miss its targets. But in copies of two e-mail messages obtained by BusinessWeek, Microsoft lays out a roadmap that shows Longhorn debuting in the first six months of 2006.

What's more, the e-mails disclose Microsoft's plans to cut some of the most far-reaching pieces of Longhorn in order to get the product shipped. For instance, Microsoft had planned to overhaul the file system, the way information is stored. The goal had been to change the way files relate to one another, so that users could quickly find documents, e-mail, and photos that have some connection to one another. It would be easy, for example, to locate not just digital photos, but e-mail from people in them. It's an enormous undertaking.

To get Longhorn out the door in its new timeframe, Microsoft has curbed its ambition. In a Mar. 4 e-mail to Windows workers, Vice-President Joe Peterson broke the news: "I think we all recognize that we need to turn the corner on Longhorn," Peterson wrote. On Mar. 19, he outlined how Microsoft plans to scale back: "We are going to focus on doing fewer things, and doing them well." The current plan calls for the file system to work on PCs but not extend to files shared over a corporate network.


  The changes also affect Microsoft's plan to make the next version of its Office software work only on Longhorn. The new plans call for that Office package to work on previous versions of Windows as well.

Windows leaders are meeting through the middle of April to make the hard decisions about which specific features to cut from the operating system. Time is of the essence. Peterson wrote that Microsoft expects to get the first wide-scale test version of the software, known as a beta, out next February.

As Longhorn development dragged, Microsoft toyed with the idea of putting out a separate Windows release beforehand, and code-named the project Oasis. But Peterson wrote in his Mar. 19 e-mail that Oasis has been shelved.


  Microsoft does plan to update the current version of Windows this June with a product dubbed Windows XP Service Pack 2. It has issued service packs for Windows over the years that have garnered little notice. But it thinks this one, code-named Springboard, will be different. The key selling point: security.

In a videoconference for employees on Apr. 1, Windows execs showed off Springboard. When the operating system first launches, it will encourage users to sign up for automatic updates for Windows, so they'll have the most secure version installed. It includes a panel that lets users monitor the status of their firewall, virus protection, and automatic updates.

And Springboard will alert users when a new application tries to open a port, essentially a side door into the operating system that programs use to exchange information. Viruses often exploit open ports, and Springboard gives users the ability to keep them shut. Microsoft has confirmed the content of the e-mails and videoconference, but it declined to elaborate.


  Still, the big kahuna, Longhorn, is at least two years away, and Microsoft is taking no chances. Later this year, it plans to begin a new marketing campaign, dubbed internally as Windows XP Reloaded. "In the marketplace, some things are a little bit spooky right now," Dave Fester, general manager of the Windows Digital Media Div., said during the videoconference. Microsoft's in-house research found that many PC users have no brand preference for Windows XP vs. earlier versions of the software.

XP Reloaded is designed to change that. It starts when Springboard ships and continues with a broad push to convince customers to use Microsoft's digital media technology. The company plans to release a new product, internally known as Windows XP Premium, that combines Windows XP Professional with an updated version of Windows Media Player. Premium will be available only on new PCs, not in boxes at retail. The new media player software lets online music stores -- including one that Microsoft plans to launch later this year -- snap right into the design, so that users can easily buy music from inside the player application.

The software will also work seamlessly with the Portable Media Player, handheld devices that run Microsoft software. The first devices, made by Creative Technology (CREAF ), iRiver, and Samsung, will debut later this year. The goal, Fester said in his presentation, is to "outflank Apple," (AAPL ) whose iPod device and iTunes Music Store have quickly set the standard for digital music.


  While Microsoft has scaled back the Longhorn vision, its ambition hasn't disappeared. It plans to continue pursuing the sweeping goal of creating a new, full-featured file system. But it's deferring that until Blackcomb, the code name for the version of Windows that follows Longhorn.

"It's fair to say we've had very ambitious dreams that were very large for Longhorn," Peterson said in the Apr. 1 meeting. "Some of the things that we do in the big dream, we are going to do in the Blackcomb time frame." When will Blackcomb debut? Probably near the end of the decade.

By Jay Greene in Seattle

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