Can Microsoft make Windows 7 'party?'

A computer store employee stacks copies of Microsoft's new operating system, Windows 7, ahead of its official launch in London

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Kai Ryssdal: It's all earnings all the time this week. Microsoft joins the party Friday with its quarterly profit report. Bound to make news. But tomorrow could be a bigger deal. Windows 7, Microsoft's new operating system, hits the shelves and millions of PCs after years of development and testing. And after some contrite and questionable public relations work. John Moe reports.


LAUNCH PARTY VIDEO: Hey, welcome to the party. The four of us along with host worldwide and you are launching Windows 7 ultimate software. So you know what? Let's take a minute or so to tell you about how great it is to host a launch party.

Have you seen this video online? It's already a YouTube classic because the unintentional comedy value is off the charts. Bad actors tell you how fun it is to host a launch party for Windows 7. Yep, Microsoft wants you to host a party for a computer operating system.

LAUNCH PARTY VIDEO: Can you believe that Microsoft put the launch of Windows 7 in our hands? Are they nuts or what?

Not nuts, bad actor, just a little shaken up. See, Microsoft used to have swagger. It put out a new operating system and pretty much everyone would buy it. That is, until Vista. Vista was slow and overloaded with security prompts. It didn't work with some hardware. It was a mess. Microsoft's whole marketing campaign for Windows 7 is built around apologizing for Vista.

George Beirn manages Chipheads, a computer repair shop in St. Paul. He's been wrestling with Vista since it was released in January of 07.

GEORGE BEIRN: We get a lot of people who come in and say they don't like Vista or they don't want it on a new machine. You know, they tell their friends and say, "Vista's horrible, I have so many problems with it."

In fact, only about 20 percent of PCs ever ended up running Vista. That lack of adoption is critical, according to Brendan Barnicle, an analyst at Pacific Crest Securities.

BRENDAN BARNICLE: Vista represented the first time that people didn't make that move from the prior release to the current release and if that were to become a practice, that would be very damaging to the Microsoft model long term.

Even the short-term damage was pretty rough. Microsoft's third-quarter earnings fell 17 percent from 2008. The economy didn't help but neither did Vista. Rivals capitalized.

MAC AD: Hello, I'm a Mac. My fellow Americans, I'm a PC. Why so official? Well some people are giving up on Vista, Mac, because it doesn't work the way they want it to.

Once again, analyst Brendan Barnicle.

BARNICLE: I don't think it's a coincidence that Apple's market share increased at exactly the time Vista came out. I think their product was getting better, but I think more importantly Vista was so weak that it opened the option for an alternative.

Microsoft still dominates the market with a 93 share. And again 80 percent of PCs have not upgraded since Windows XP, it came out eight years ago. Global PC sales are expected to improve with the economy and Windows 7 is getting good reviews. Add in that Microsoft's Bing search engine seems to be catching on, and things in Redmond may be looking up.

BARNICLE: The success that they are likely to have with 7 and coincidentally the success we've seen with Bing has really renewed the confidence of the rank-and-file developers at Microsoft to demonstrate that they really can build industry leading products again.

So those launch parties might be a little more fun.

LAUNCH PARTY VIDEO: Make the thing you're demonstrating personal to someone at the party like the way I made Chip's files get transferred by Windows Easy Transfer. Or the way I showed my guests Web Slices by talking about Frank's online auction shopping.

OK, only a little more fun.

In St. Paul, I'm John Moe for Marketplace.

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