Microsoft won't ship an interim version of Windows, retail or otherwise, before Longhorn according to email seen by Business Week. The memos from a week ago suggest that Microsoft is jettisoning features from Longhorn in order to meet the ship date of the first half of 2006.
WinFS appears to be the main casualty, having already been curtailed. A year ago Microsoft confirmed that Longhorn wouldn't, as expected, introduce an entirely new database storage architecture in which file systems NTFS would be a plug-in. Rather, Microsoft would add database like properties to NTFS. Business Week reports that the new features of WinFS will only work on local storage rather than across networks. That's been pushed into Blackcomb, which is way out towards the end of the decade.
If they start trimming all the good features, I am afraid that Longhorn will not be as much as impressive it would have been. h34r:" class="inlineimg" />