Microsoft is in the final stretches of testing an update to Windows XP Media Center 2005 expected to ship this fall.

Earlier this week, the Windows enthusiast site Neowin.net reported that Microsoft was set to release to manufacturing the product — code-named "Emerald" — in August.

(Neowin subsequently pulled the story with no explanation as to why.)

"It's pretty much essential to hit an August date to get integrated into PCs for the holiday buying season," said Windows expert Ed Bott of EdBott.com.

"If they're adding support for the Xbox 360 and laying the groundwork to have it in your house by Christmas, they're going to make sure the Media Center Edition computers are ready for it when it comes out," agreed Robert McLaws, president of Interscape Technologies.

Microsoft announced in May that it was readying a free software update to Windows XP Media Center Edition 2005 that would enable customers to take advantage of the Media Center Extender technologies built into Xbox 360 gaming systems.

The update is currently at the Beta 2 test stage, according to Neowin.net, Neowin said the update will include the following:

• Native digital cable support;
• Content protection;
• Improved burning (digital-rights management, network, Hi-def, DVD-RAM);
• Platform security; and
• Support for additional languages and locales

"Adding features like native digital cable support would be useful and make the platform more compelling. The other (features) would make the user experience better," said Michael Cherry, Senior Analyst at Directions on Microsoft.

"More than likely digital cable will be the primary draw, with compression and content licensing," said McLaws. "If you are able to record a purely digital show from start to finish, then I would expect they might have some DRM worked in there, too."

Others felt that the Xbox 360 support will be the strongest feature of Windows XP Media Center 2005 update.

"The thing that will drive people to get this version of Windows is Xbox 360, which will reportedly incorporate the capability to act as a Media Center Extender. If someone's getting a new Xbox, this will be an attractive addition," said Bott.

"The biggest question is, are they going to charge for it? If it's free, as Windows XP Service Pack 2 was, it makes no sense not to install it," McLaws said.

But "calling (the pending release) an 'upgrade' is potentially misleading," Bott said. "Windows XP Media Center Edition is only available as an OEM product. If someone is already enthusiastic about Media Center, they will probably want this update (which I suspect will be made available as a free update package). If they're ready to get a new Media Center PC, this will be the one they're able to buy. So the upgrade decision isn't that big a deal."

"Other than support for the Xbox 360, it is too soon to talk features," a Microsoft spokesman said. "It will be out in the second half of the year and be free and downloadable."

The next big Media Center Edition release, code-named "Diamond," will be available in the Longhorn timeframe, and also for the Tablet PC, according to sources.

This story was updated on June 23 to include comments from a Microsoft spokesman.