Microsoft has been putting back the release date of its latest operating system, Vista, since at least early 2004 when many of its developers were reassigned to develop security service packs for Windows XP.

Now it has been pushed back again, missing the lucrative period of Christmas 2006, instead targeting January 2007. The business version is expected slightly earlier, in November, but companies on the software assurance programme, which guarantees free updates to the latest releases, could lose out if they are forced to renew for another term.

Industry analysts could not quite decide if the Vista delay was an embarrassment or shrewd pragmatism from Microsoft. "The most surprising aspect in the whole affair is the restraint from the large PC vendors, Dell and Gateway, who seem publicly to be shrugging off the delay," says David Bradshaw of Ovum. "We suspect that their private comments to Microsoft will have been very, very different."

But others decided the delay may be Microsoft’s best chance of producing a secure and enduring product. "Given Windows’ history as buggy and unsecured, it’s just plain smart to delay the release rather than ship a flawed product," say Ted Schadler and Paul Jackson of Forrester Research.

This latest delay – extending what was already the longest period between two releases – was accompanied by news of a more long-term significance, as the software giant announced a comprehensive reshuffle of its platform, products and services division aimed at improving the engineering behind Vista as much as strengthening Microsoft’s potential for online advertising revenue. It is only seven months since Microsoft’s last overhaul, which created its three divisions – platform, products and services (PPSD); business; and entertainment and devices.

The reorganised division that now sits behind Vista is compromised of eight new and existing groups: the Windows and Windows Live Group; the Windows Live Platform Group; the Online Business Group; the Market Expansion Group; the Core Operation System Division; the Windows Client Marketing Group; the Developer and Platform Evangelism Group; and the Server and Tools Business Group.

The aim, according to Kevin Johnson, co-president of PPSD, is to "improve clarity of decision-making, drive greater accountability and reduce layers in the organisation so we can move faster." While he denies that the structural changes are "a reaction to any one specific company" – such as, say, Google – Microsoft has recently launched Windows Live, a suite of online services, and has devoted one of its most respected managers, Steven Sinofsky, to oversee that unit and attract more online advertising.

But Google’s purchase of Upstartle, the creator of Writely, a free web-based word processing application, could put pressure Microsoft’s highly profitable Office package. As Johnson says: "Extending our reach and impact with and to advertisers, continuing to enhance our search offering, and building out our operation infrastructure are critical to our long-term success."