Microsoft's retreat from its Longhorn ambitions and its decision to add several Longhorn technologies to Windows XP and Windows Server 2003 may rob the next Windows release of its glamour, but users and developers gain more than they lose, some observers say.

When Longhorn is released in 2006, it will be without the WinFS unified storage system, Microsoft said last week.

WinFS is one of the three key components of Longhorn that Microsoft had hyped. It uses relational engine technology and promises to make it easier for users to find related files, documents, and e-mail messages on their computers and on corporate networks.

Microsoft now plans to deliver WinFS, which is based on technology from its forthcoming SQL Server 2005 database, as an operating system update after the Longhorn release.

While the WinFS delay may be a loss, the promise to offer key Longhorn technologies for current operating systems and a commitment to deliver Longhorn in 2006 are important gains, analysts and users say.

Support in Windows XP and Windows Server 2003 for the Avalon graphics system, the WinFX application programming model, and the Indigo communications subsystem will allow developers to target a much larger installed base.

Previously, Microsoft had only committed to making Indigo available for earlier operating systems, which potentially meant that applications developed using WinFX and Avalon would only run on Longhorn PCs.

"This is a smart move," says Dave Burke, a senior software developer at LLI Technologies, an engineering and construction company in Pittsburgh. "Maybe individual presentation and communication subsystems don't generate the hype of Longhorn, but to developers who live in the real world of incremental technological evolution, this is welcome news."

Al Gillen, a research director at IDC, agrees. "Microsoft has a really large installed base, so any time they bring out a new technology, it has to be made available to the older systems, because if they don't, they have a really large installed base of incompatible systems."

The delay of WinFS and the decoupling of WinFX, Avalon, and Indigo from Longhorn does take most of the glamour from the hyped operating system. It will no longer be a "big bang" release for the company, which is what Microsoft executives had promoted it as.

"The name Longhorn is going to mean something completely different now. It is just going to be the next Windows release," says Rob Helm, research director at Directions on Microsoft, in Kirkland, Washington.

Microsoft has not shipped a new client operating system since 2001, when it released Windows XP. PC makers are eager to see Microsoft release Longhorn to drive new PC sales. Most users don't load a new operating system onto existing hardware, but instead buy new computers with the new operating system, according to analysts and users.

In addition, Microsoft's commitment to make Longhorn compatible with older Windows versions by updating the operating system with technologies previously reserved for Longhorn may help users decide to upgrade to Windows XP and Windows Server 2003, Helm says.

"It makes sense for users to get on Windows XP and Windows Server 2003, knowing that they will be able to get most of the new features that Microsoft intends to deliver between now and about 2008," Helm says.

Microsoft first publicly talked about the planned Longhorn features at last October's Professional Developers Conference held in Los Angeles. Company Chairman and Chief Software Architect Bill Gates hyped the operating system as "the biggest release of this decade, the biggest since Windows 95" and called WinFS a "Holy Grail."

Microsoft plans to release a first beta of Longhorn in mid-2005. A Longhorn Server is planned for release in 2007.