With current technical problems mounting, the same sources say that 2008 is starting to look likely, if not optimistic.

If there is any truth in this comment, then it would not be too far off to say that MS may have finally bitten off more than they can chew. There are so many things that have changed since the 90's when their business model gave them the dominant position that they have today. Who knows what other things could happen in the next 3 to 4 years? Hardware is still getting cheaper, the mass deployment of internet applications is really just now starting to mature, wireless internet is still in its infancy. An 'all-in-one' OS just doesn't make that much sense anymore, most people don't care about all of the bells and whistles, they just want something that is fast and easy to use. IMHO you could probably get away with something that only has a really slick GUI that doesn't do much more than connect to the web and lets the server-side apps do all of the heavy lifting. Linux is an ideal candidate for this type of distributed computing paradigm (although some slimmer OS like the Hurd would work even better and it will be coming into its own by the time Longhorn is released) by that time Google have replaced Microsoft as the next evil corporation #1 anyway (like MS replaced IBM in the nineties.)