There are many new developments in store for the next version of Team Foundation Server. Microsoft has altered its shipping schedules for developer tools, shortening the release cycles. That means that Team System and Team Foundation Server will likely have fewer new features, but instead will contain many enhancements, fixes, and improvements.
One of the big developments in Team System is the internal adoption of the tool. The Developer Division (DevDiv) product group was the first team to test-drive Team Foundation Server (ironically to develop Team System!). Next on the list is the Office group and looking in the near future, the Windows group. The term using your own software is called dogfooding. One of the important additions to Team Foundation Server is the Team Foundation Server Proxy, which was added because of cross development between the Visual Studio North Carolina (responsible for Team Foundation Version Control) and the Redmond campus. Through testing, it was found that accessing and checking out code from Team Foundation Server over HTTP (and long distances) needed a boost for scalability and performance.
What does this mean in terms of Team Foundation Server vNext? Primarily, it will be more scalable. (The current limit for Team Foundation Server in v1 is three thousand users.) As they adapt the tools for their development environment, many of the enhancements will be pushed out in the next product. Many of the painful areas of the product (for example, having to edit XML to create or modify process templates) can be solved with external tools such as the Process Template Customization tool.
Expect many out-of-band releases from Microsoft, Partners, and the community at large. For example, there is Codeplex - a GotDotNet-like (gotdotnet.com) open source project directory driven by Team Foundation Server. You can learn more about Codeplex by visiting it online at codeplex.com.
Brian Harry announced that a Team Foundation Server service pack will be available Q2/2006 period. You can learn about the challenges of implementing Team System within the Developer Division and about the Service Pack on his blog at http://blogs.msdn.com/bharry/archive/2006/05/17/599817.aspx.