Ever since the release of Windows 95 made the BBC evening news, the arrival of new Microsoft operating systems has attracted intense scrutiny. But with the software giant recently announcing an 11 per cent profit fall for its last fiscal quarter, as well as its first ever large-scale layoffs, the pressure to come up with a grandstand release has never been greater than it is today. Much is riding on Windows 7.

Unfortunately for Microsoft, now is not a great time to be gearing up for a major new software launch –­ and that’s putting it mildly. The global economy has tanked, there is much talk of software residing in the cloud, not on the desktop, and IT spending is on a increasingly tight rein.

Nevertheless, Bill Veghte, Microsoft’s senior vice president of the Windows business and the man charged with making Windows 7 a success, is confident the product will confound the doubters.

He concedes that in the current climate, chief information officers (CIOs) are increasingly looking at how they can remove cost, but contends that there is still a huge market for Windows 7 in the enterprise.

Businesses can take one of two different approaches to the downturn, says Veghte. One is to hunker down, strip out costs and wait for the economy to pick up. Alternatively, some business leaders will “seize the opportunity to distance themselves from the competition. Keeping that focus on taking out costs, but also innovating and building flexibility into operations,” he says. It is those companies that Veghte believes will lead the charge for Windows 7.

The new operating system will include features that will appeal to IT chiefs, developers and employees, says Veghte. Features such as Branch Cache, which allows staff located outside main company offices to more easily access files, is one example. Another he cites is HomeGroup, which provides a secure method for home workers to access corporate systems, without having to connect via a sluggish virtual private network.

Given the widespread reluctance among IT leaders to upgrade to Windows Vista, Microsoft needs to demonstrate that its next operating system really delivers compelling business benefits. If it fails in this, many organisations will simply continue to muddle along with XP or start to look more closely at cloud-based alternatives.

Veghte is acutely aware that Microsoft faces a substantial challenge in persuading its vast XP installed base to upgrade. The move to Windows 7 from Vista will be seamless, he says, but that vast pool of users still on XP is faced with a complete re-installation. The appetite for such a labour-intensive task is likely to be negligible. Most migrations from XP to Windows 7 will result from the “purchase of a new machine”, admits Veghte.

With many CIOs looking to sweat hardware assets, Microsoft’s hopes of capitalising on wholesale PC upgrades look pretty forlorn. But as Veghte points out, most organisations will have bought “Vista-capable” PCs in the past two years, even if they are running XP and not Vista. “Those machines will be perfectly capable of running Windows 7,” he says.

And once employees see the benefits colleagues are getting from using Windows 7, demand will build, predicts Veghte.

Microsoft is hoping for an enthusiastic user reaction to Windows 7. And so far, the response from those testing the beta versions has been largely positive. But whether that is enough to convince IT buyers to take the plunge remains to be seen.

Will buoyant netbook sales fuel Windows 7 adoption?

If business take-up of Windows 7 turns out to be sluggish, could momentum come from elsewhere?

With consumers delaying big-ticket purchases, it seems unlikely that they will drive Windows 7 uptake. But the one segment of PC sales where growth has been vigorous is the netbook market. How will Windows 7 fare here?

Veghte is hopeful: “Windows 7 will run beautifully on netbooks,” he says.

But there is a downside for Microsoft in the growing popularity of netbooks. There will be two versions of Windows 7 that can run on netbooks – one a pared-down, entry-level system, the other the fully featured premium edition. In this price-sensitive market, customers may baulk at paying for the premium edition. Industry estimates suggest Microsoft only makes half as much from the sales of netbooks running basic versions of its XP system as it does from sales of fully featured laptops – although Veghte refuses to be drawn on the accuracy of those estimates.

He is, however, bullish about Windows 7 running on netbooks. The difference in price between a netbook running the basic edition and one with the premium version is “the price of a tank of petrol”, he says. Once users appreciate the benefits of the premium edition, he says the decision will be a no-brainer.