"It's really an indication of the end of the Gates era," Smith said. WinFS was Gates' "pet project," not Ozzie's.
"It was an opportunity to showcase some leadership on the part of Ray Ozzie," Smith said. "I believe he had something to do with this decision, but they chose not to highlight that."
Along with the changing of the guard, the announcement also reflected Microsoft's attempt to reduce the number of development projects and to simplify operations, Rob Enderle, analyst for the Enderle Group said. Microsoft recognizes that it needs consolidation among its many development groups.
"It's too early to tell if (the WinFS changes) are going to work, but for those who are more operationally inclined, this could be a positive step," Enderle said.
Finally, the latest announcement brought up once again the question of Microsoft's trustworthiness when it comes to product announcements. Through its history, the company has often unveiled products that either didn't ship on time, or were dropped all together.
"It's just one more notch against Microsoft in terms of trust," Wilcox said. "You start adding these things up, and some customers may exercise greater caution with upgrades around Microsoft technology."