During a presentation at the University of Illinois a senior Microsoft OS engineer showed a glimpse of the next generation of Windows, internally dubbed Windows 7.
A video of the presentation has been published. The video is rather long, but Arstechnica has a good summary of what Eric Traut has revealed about the future Windows OS.
At the core of the presentation was a stripped down Windows Kernel that Microsoft calls MinWin. MinWin has no UI but runs a web server. The MinWin OS only needs 25MB of disc space.
More details on Arstechnica.
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