The upgrade is planned ahead of Longhorn--the next major version of Windows. Microsoft Chairman Bill Gates first mentioned the release in an, published Monday.
"We will have a new server release that will likely come up before Longhorn," Gates said. Until Friday, though, Microsoft had declined to expand on his comments.
The software giant said the specifics of the upgrade are still being decided.
"The form that will take is still being determined, as well as timing and what we call it," said Jeff Price, senior director of the Windows Server Group. "You can think of it as an evolution of Windows Server 2003."
With those comments, Microsoft has left open a wide range of possibilities as to what it is planning. The company could simply roll up its various bug fixes and service packs into one update, or it could make more substantive changes to the OS. Microsoftin April of last year.
The most likely option for Microsoft in the near term is to put a number of add-ons that the company has released separately into the operating system, said Rob Helm, an analyst at market researcher Directions on Microsoft. However, there are a number of other things Microsoft could do, he said, including adding support on the server side for some of the features planned for Longhorn.
The move follows word from the software maker that it is alsoto the desktop versions of Windows XP prior to Longhorn. The effort, dubbed Windows XP Reloaded, refers to a range of possibilities under discussion that would improve the current version of Windows before Longhorn's arrival.
The timing of Longhorn is increasingly uncertain. Microsoft originally said the operating systembut then withdrew that date and said only that it would ship when it is ready. Analysts have been assuming that it will come by 2006, but some now say that it may not meet that date, either.
Microsoft acknowledged that it needs an update to its server OS at some point that will be ready to interact with PCs running Longhorn, a major revision to the OS that introduces a new file system and presentation engine, among other major changes.
However, Price said it is not clear whether those changes will come with this update.
"That's not a decision that has been made," he said.
Helm said Microsoft could choose to add support for Indigo, a Web services technology that Microsoft has said will be part of Longhorn.
"Microsoft has talked about some features for Longhorn that really make more sense for servers," Helm said. "Most Web services are going to be on servers."
Helm sees other options as well, including adding a planned update to its ASP.Net framework into Windows Server. The current plan has been for Microsoft to include that as part of an update to its Visual Studio developer tools. "It could be very attractive to roll that back into the OS," Helm said.
Microsoft has been somewhat vague on its server plans. The company has said there will be athat will come after the desktop version, but it has said little else about that release.
Helm said that while companies do not like to upgrade their server operating systems often, the Microsoft probably needs to do something before the release of Longhorn Server.
"If they kept the next Windows Server release until after Longhorn, that would put the next release in 2007 or 2008, even if Longhorn came out in 2006," Helm said.
The company also could do a better job of being clear about its plans, he said. "Especially with servers, it's something everybody needs a long-time horizon on," Helm said.
So far, Microsoft has only outlined the eventual release of Longhorn Server as well as a service pack upgrade due in the second half of this year. Helm said a clearer schedule of those releases would help.
"Even a service pack requires some advance planning," he said. "Not being able to see more than one service pack out is a real disadvantage to a Microsoft-focused IT organization."
News.com's Mike Ricciuti contributed to this report.