Right now everyone is getting excited over the apparent distribution of early Windows 7 builds to external Microsoft partners. One poster over at Neowin is claiming to have installed the build and while unsurprisingly its difficult to verify this, judging from his info it could be true. He ends his post with the following (emphasis mine):

"The feedback tool lists the "pillars" of Win 7. You can see that Microsoft is aiming to fine tune this release as the case in XP rather than technological advancement as in 2K. highlights include"network aware", with improved connection tools and detections. It will have the ability to detect which network you're in and switch your settings and devices accordingly; With Live account, you can carry your IE settings and favorites with you; Gadget data caching; New Calculator, Paint, and Wordpad using WPF; install to desktop in 10 mins with only 1 reboot; instant streaming; better battery mileage, etc. All descriptions are scenario-based, so what will actually turn up is still yet to know."

Bing. And now the penny drops. Just like Ray Ozzie alluded to in his Internet Services Disruption memo, there is an opportunity through software+services for Microsoft to deliver a "Seamless OS:

The operating system as it would be designed for today’s multi-PC, multi-device, work anywhere, web-based world.  Enabling you to login using any of your service-based or enterprise identities.  Deploying software automatically and as appropriate to all your devices, and roaming application data and settings.  Permitting seamless access to storage across all your PCs, devices, servers and the web."

So for everybody who has been emailing us and leaving comments about what is happening with Windows Live Favorites, you have one possible answer right here. Of course the service would probably need to be renamed if it carries settings too, but lets avoid the details for now and focus on the overall picture. Again a reminder than the Windows 7 information linked to above may not be 100% accurate or ever delivered in any public builds. However that said, "providing a richer browsing experience when running on Internet Explorer, including roaming of favorites and browser settings" is something that Chris Jones and his Windows Live teams are already looking at for Wave 3 and beyond. As well as accessing favourites and settings from anywhere, Ozzie also wants users to access their machines and data remotely too, something Horizon may deliver. 

Its worth remembering that the aim is to make Windows Live the natural online extension to Windows, something that has already been started with Wave 2 and Windows Vista, notably around Windows Live Mail and Windows Live Photo Gallery. What remains to be seen is how Microsoft delivers this in Windows 7 and later releases without incurring the wrath of yet more EC anti-trust cases.

(Via Bink and Long)