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2003: The dawn of Patch Tuesday
The security problems that had plagued Windows XP at its launch continued in summer of 2003 with a widespread malicious software attack called MSBlast/32 (aka Blaster). It spread over networks using the RPC protocol and caused affected computers to go into a spontaneous reboot loop. In October of that year, Microsoft made the controversial decision to release updates on a regular schedule. The second Tuesday of each month became known as Patch Tuesday. Instead of scrambling to install updates as soon as they arrived, enterprise customers could plan updates for a regular window each month.
For more details, see Larry Seltzer's "The triumph of Patch Tuesday" and my "Ten years of Windows malware and Microsoft's security response."
2004: Windows XP Service Pack 2 arrives
In the wake of multiple security problems, Microsoft had focused all its efforts on re-engineering its development process, leading to a new way of designing software and writing code: the Security Development Lifecycle. Windows XP Service Pack 2, code-named "Springboard," was one of the first products to come out of that initiative. As Jim Allchin told Mary Jo Foley, this could easily have been a separate Windows release instead of just a service pack. The decision to release it as a free service pack was a deliberate one, designed to get its significant improvements on as many desktops as possible, as quickly as possible.
And as I noted a few years later, many one-time critics decided by this time that "the interface wasn’t so bad after all (and if you really hated it you could make it look just like Windows 2000)."
2005: The Longhorn Reset
Microsoft had big plans for the successor to Windows XP. It was code-named "Longhorn," and it was filled with "gee golly whiz" features that were going to take the world of personal computing by storm. Longhorn made a big splash at the 2003 Professional Developers Conference (PDC) and a beta shipped in 2004. Unfortunately, most of what was in Longhorn didn’t work particularly well. As the calendar rolled over into 2005, the Windows team reviewed their grandiose plans for Longhorn and scaled it back, throwing away much of the development effort and essentially restarting from scratch.
That decision, which became known as the “Longhorn reset,” was publicly revealed in an embarrassing Wall Street Journal article in 2005. "Longhorn was irredeemable ... Microsoft needed to start over."
(You can see what Longhorn was supposed to be in this gallery from Stephen Chapman.)