Microsoft Sees '06 Launch of 'Longhorn' Windows Upgrade

Updated from 2:56 p.m. EDT

Microsoft (MSFT Quote) on Friday made official its plans to release its next Windows upgrade in 2006, although the software will be missing one of its key features.

Microsoft had previously said that the operating system update, code-named "Longhorn," would include a new filing system that would make it easier for users to search their hard drives. But the company said on Friday that the technology, dubbed "WinFS," won't be ready by the time the company releases Longhorn.

The update of Microsoft's OS "is not going to contain one of the more anticipated changes, the file system, and they've been pushing that as a major change. Certainly it won't be what they had been initially promising," said Alan Davis, an analyst for McAdams Wright Ragen.

But today's news didn't come as much of a surprise, either, he added. "We've been hearing rumors that Microsoft is either paring back the file system or that Longhorn has been pushed back to '07, I guess this is one way for them to get it out on time," he said. Davis has a buy rating on Microsoft; his firm hasn't done recent investment banking for the company.

The stock closed Friday up 2 cents to $27.46. In after-hours trading, the shares were up a penny.

"We've had to make some trade-offs to deliver the features corporate customers, consumers and [Original Equipment Manufacturers] are asking for in a reasonable time frame," said Jim Allchin, vice president of the platforms group at Microsoft, in a statement. "Our long-term vision for the Windows platform remains the same."

The company plans to have the filing system technology in beta testing at the time of the Longhorn release and to distribute it at some later date. Microsoft will not ship the beta version of WinFS with Longhorn, said company spokesman Greg Sullivan. Sullivan didn't know when Microsoft will release the final version of WinFS.

Microsoft intends to release Longhorn in the second half of 2006, Sullivan said. The release will be broad enough that consumers will be able to purchase the operating system that year, as well as buy it preinstalled on PCs, he said. However, Sullivan did not give a more specific timetable for Longhorn's release.

Sullivan's comments about Longhorn's release schedule echoed previous predictions from Microsoft representatives. However, the company has pushed back its Longhorn timeline at least once.

In addition to WinFS, Longhorn is supposed to include two other key technologies: Avalon, a graphics subsystem, and Indigo, which offers support for so-called Web services. But instead of being unique to Longhorn, Microsoft said on Friday that it will make those features available in 2006 to its current operating system lineup: Windows XP and Windows Server 2003.

The changes to Longhorn and its core technologies could ostensibly dampen demand for the update. But Microsoft's market dominance and security concerns about its legacy operating systems may well ensure that Longhorn is a hit nonetheless.

Longhorn will include a new user interface, a new search feature that promises quicker results on hard drive queries and enhanced security and performance, Sullivan said. Even though the operating system won't include WinFS, those features and others should encourage users to upgrade, he said.