Windows 7 Ready to Launch

Microsoft (Nasdaq: MSFT) plans to replace the Vista operating system with Windows 7 in October. In its initial release, Vista was a resource hog and less reliable than Windows XP. As Windows 7 steps into the fray, Microsoft is facing entirely new challenges, such as strong competitors and the rise of the netbook system that places new demands on the operating system.

Laptops are getting smaller and less impressive, while smartphones only get more powerful. The convergence of those two trends is putting new operating systems from Microsoft competitors on netbooks. And now even mobile service providers such as AT&T and Verizon are selling netbooks.

Nonetheless, Microsoft looks prepared for these challenges. Windows 7 was designed with the red-hot netbook market in mind, so it's a fair fight. And both corporate and retail customers may jump at the chance to get out of the XP-versus-Vista dilemma when October comes. Unless 7 turns out to be another disaster — which is unlikely — it looks like Microsoft is going to ring up a lot of fresh operating-system sales this fall. And isn't that what the company is all about, anyway?

It's back to the basics for Microsoft, and that may make investors like both the company and the stock again. (Microsoft is a Motley Fool Inside Value recommendation.)