New IE Version Coming
According to this article on CNET, Microsoft has reversed its plans and will release another version of Internet Explorer separately from the release of the next version of Windows. This is a reversal of their original plan to only update IE as part of Longhorn.
IE 7.0 will only work on machines running on Windows XP Service Pack 2 and a beta should be available by this summer.
To state the obvious, this is a major change of course for MS. NPD Group analyst Ross Rubin was quoted by CNET as saying that he thinks "it's a response to both the delay of Longhorn and the challenge of Firefox."
Whatever the reason, I think that this is a good thing for the web. I'm neither a Microsoft fan or hater - I'm a pragmatist; I use whatever works. So, if Firefox spurs Microsoft to update IE and actually make it a decent browser again, I'm all for it. Netscape didn't die because IE sucked. Netscape died because IE sucked less.
Netscape died because Microsoft committed itself to producing the "best" web browser on the market. And, despite everything else, when Microsoft decides it wants to be the best at something - watch out.
Update: For a more in-depth and slightly more pessimistic take on this, see QuirksBlog.