Microsoft Unveils Windows 7

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NEW YORK (Reuters) – Microsoft Corp launched Windows 7 on Thursday in its most important release for more than a decade, aiming to win back customers after the disappointing Vista and strengthen its grip on the PC market.

The world’s largest software company, which powers more than 90 percent of personal computers, has received good reviews for the new operating system, which it hopes will grab back the impetus in new technology from rivals Apple Inc and Google Inc.

“It’s the first really significant release of Windows in a decade,” analyst Brendan Barnicle of Pacific Crest Securities told Reuters Television. “Given the missteps around Vista, people really questioned Microsoft’s relevancy in the technology space. So this is a critical first step for Microsoft regaining that credibility.”

The new system — which is faster, less cluttered and has new touch-screen features — comes almost three years after the launch of Vista, whose complexity frustrated many home users and turned off business customers.

The success of Windows — which accounts for more than half of Microsoft’s profit — is crucial for Chief Executive Steve Ballmer to revive the company’s image as the world’s most important software firm.

“I have to say I’m chomping at the bit,” Ballmer told an audience of Microsoft customers and partners in Toronto on Wednesday, adding that he is ready to make sales calls himself on Windows 7.

Sales won’t immediately impact the bottom line of Microsoft, which is expected to post a lower quarterly profit on Friday.

CHEAPER THAN VISTA

Microsoft is charging $199.99 for the Home Premium version of Windows 7, or $119.99 for users seeking to upgrade from older versions of the operating system — well below comparable prices for Vista.

It also has a range of offers in conjunction with retailer Best Buy and PC makers such as Dell Inc and Acer Inc.

For the first time, shoppers will be able to buy PCs loaded with the software direct from a branded Microsoft store, with the first of a planned chain set to open on Thursday in Scottsdale, Arizona.

The U.S. holiday season will soon reveal whether consumer PC sales get a kick from Windows 7, but success with corporations — the key to Microsoft’s financial power — won’t be clear until next year, analysts say.

“Come June of next year, we are going to get the real indication of the business-to-business marketplace,” said Mark Simons, chief executive of the U.S. arm of Toshiba Corp, the world’s No. 5 PC maker, on Wednesday.

Early indications are that companies are getting ready to switch to Windows 7.

“People like it,” said Michael Capone, chief information officer for payroll services firm ADP, pointing out its quick start-up time and good user interface.

“There is a line outside my door from people wanting to get into the pilot program,” said Capone, at a technology conference in Orlando, Florida, on Wednesday.

His company typically waits at least 18 months to begin broad deployment of a new version of Windows, said Capone, but this time he could be more aggressive.

“In the surveys that we’ve done about half the CIOs (chief information officers) indicated that they would just use Windows 7 on existing PCs as opposed to replace the entire hardware,” said Barnicle. “That would be very positive for Microsoft but maybe not so positive for the PC manufacturers.”

SHARES UP

Good reviews, and a surge in technology stocks across the board, have lifted Microsoft shares about 80 percent since March. They hit their highest level in just over a year on Wednesday, closing at $26.58 on Nasdaq.

“This is a better operating system — it does the job,” said Lance Ulanoff, editor-in-chief of PCMag.com. “They’ve certainly got it a lot more right than they did with Vista.”

A range of new PCs incorporating the software in all shapes and sizes from Hewlett-Packard Co, Dell and others are set to be unveiled on Thursday, in the hope of reigniting consumer spending before the holiday shopping season.

Global PC sales rose 2.3 percent in the third quarter compared to a year ago, according to research firm IDC, after two quarters of declines.

Market-watchers are betting on further recovery of computer sales next year, as the economy improves and businesses replace old machines, but opinion is divided on how strong the impact of Windows 7 will be.

“What’s going to be really interesting is whether this spurs a hardware replacement cycle or it’s just a Windows replacement cycle,” said Barnicle, who estimates that more than 820 million PCs across the world run Windows.