According to “word on the street” source Microsoft Watch, Microsoft may be trimming key components of the Longhorn Operating System, it’s next generation version of Windows, in order to meet a late 2006 release date.

While the news won’t be official until later today, inside sources are indicating the new OS will be more evolutionary than revolutionary. According to Microsoft Watch, “The resulting Longhorn is expected to consist primarily of incremental, core improvements — better performance, power management and the like.”

Which features are being eyed? Apparently, “it will cut WinFS from Longhorn” and “it looks like most of Avalon is going to get the ax”, said an anonymous developer.

This is after a similar “decoupling” of the Indigo communication subsystem earlier this year.

While this cutting is happening, apparently these features are not being forgotten completely. In fact, they may enjoy an expanded role through availability not only in Longhorn, at a future date, but also in other OS’s.

While this will mean a delay before we see this features, it appears as though some of the most exciting features for users and developers alike will be available on the “modern” OS’s, primarily Windows XP. A tradeoff of reach vs rich perhaps? We should know more this week.