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Windows 7 not likely to jolt PC market

Speaking at an investor conference, Microsoft's Bill Veghte says history suggests that any bump to the PC market from a new OS will be a modest one.

Microsoft's top Windows business executive said Monday that for all his excitement about Windows 7, he doubts the release of the operating system will lead to a significant spike in PC sales.

Bill Veghte Microsoft

"History would tell us that generally as you ship a Windows release into the market...the bump is very modest," Microsoft senior vice president Bill Veghte said in a "fireside chat" at the UBS Global Technology and Services Conference. "You will see a little bit, but it is modest."

Veghte announced last week that Microsoft plans to ship Windows 7 on Oct. 22. The company will also have a program in the coming weeks through which those who buy a new PC with Windows Vista will get a free or low-cost upgrade to Windows 7. A leaked memo from Best Buy suggests that the program will kick off at the end of this month.

On the business side, Veghte said that there is "very good enthusiasm around Windows 7," but that will not be the biggest factor in the decision by corporations about when to upgrade their computers.

"It will get drowned by the macroeconomic environment," he said in the speech, which was Webcast on Microsoft's investor Web site. "As the macro environment comes back, people will have to buy new PCs. People aren't using PCs any less."

Veghte was pressed on whether Windows 7 will help Microsoft see improvement in the average selling price of Windows, which has taken a big hit because of the rise of Netbooks, a low-cost notebook PC variant.

"It's pretty hard to tell," Veghte said. "I think in this economic environment it is very hard to see us at the mix we had (during Windows XP and the beginning of Windows Vista). As we come out of the economic downturn it's a very interesting question."

Veghte was also asked about Microsoft's recent cost-cutting effort and said it is something the company hasn't done in the 19 years he's been there. He said every expense has been questioned as to whether it is essential.

"It has been line by line," Veghte said. "As a culture we've got to go through and really make the hard trade-offs. I think it's a wonderful thing for the company, for the culture."

As for whether Microsoft will offer a cheaper upgrade for Windows Vista users, Veghte didn't give a specific answer, but did say Microsoft wants to make sure that the upgrade path is "very smooth" from a pricing perspective.