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31 March 2005 Microsoft has finally released the delayed first server pack for its Windows Server 2003 system, bundling together various security patches and performance enhancements for the server-based operating system.

But the release of Microsoft's delayed service pack is almost as instructive for what it reveals about the development challenges the software titan faces as it is for the content of the release.

"This release is a pretty important milestone", said Mike Nash, vice president of the security business unit at Microsoft. "We've learned about new kinds of threats, new engineering techniques and procedures."

Microsoft faces significant challenges in the server operating system battle, with Linux frequently perceived as the more secure option.

It has invested heavily in improving its record on security. To this end, it has been developing its software to run on 64-bit processors. This should allow it to strengthen the security of its operating systems, without compromising on performance.

Indeed, Service Pack 1 is based upon the underlying technology that enables the 64-bit version of Microsoft's software. Versions of both the XP and Windows Server 2003 designed specifically for such processors are to be launched next month.

But such enhancements come at a cost. Service Pack 1 has been delivered late: it was expected to be released by the end of 2004.

Currently Microsoft faces some tough questions about how it develops software. It is under pressure from customers signed up to its licensing schemes to deliver updates and new versions of software to a fixed timetable.

But software development is a notoriously difficult process, and Microsoft is continually caught between deliver sufficient enhancements to attract customers and the pressure to release products to schedule.