This week in Microsoft

The software giant passed a major milestone with the release of its first full test version of Windows Vista, the next generation of its flagship operating system. The beta was released Wednesday--a week ahead of the Aug. 3 target Microsoft had announced last week.

The operating system, previously code-named Longhorn, is being offered to about 10,000 testers and will be available shortly to about 500,000 people who are members of Microsoft's MSDN developer program or its Technet program for corporate technology workers. General availability of Vista is scheduled for next year.

Though Microsoft has included a more complete version than past developer preview releases, a company executive stressed that Beta 1 is not aimed at the masses.

"Beta 1 is not what I would call deeply interesting, unless you are a real bithead," Windows chief Jim Allchin said in an interview with CNET News.com. "This beta isn't really for even tech enthusiasts. This beta is to test out some of the capabilities that we've got, if you will, in the plumbing."

However, some CNET News.com readers seemed dubious about the beta.

"Looks a lot like XP to me," reader William Squire wrote in News.com's TalkBack forum. "I was hoping for something a bit more dramatic. Every time an interface picks up new features I feel the need for a bigger monitor to maintain the same screen real estate for my application of focus."

Others cautioned against getting one's hopes up: "Do not expect real innovation from (Microsoft), and you won't be disappointed," wrote reader "Keith J."

"In fact, maybe we should begin to look at (Microsoft) as merely providing a computing foundation. Look to others--start-ups; open source; small, hungry companies--for real innovation, real value add."

In addition to Vista, Microsoft revealed other tricks up its sleeve this week.

CEO Steve Ballmer announced that Microsoft is planning new, higher-priced versions of both Windows and Office in the coming years as part of its effort to expand sales. Ballmer said the company will add high-end desktop editions and new server options with the next versions of the operating system and productivity suite. He noted that the existing premium Windows XP Professional version has brought the company billions of dollars in extra revenue.

At the other end of the spectrum, the software giant noted that its low-end version of Windows is growing in popularity. The company has sold 100,000 copies of its Windows XP Starter Edition. The release of the sales figure marks the first time the company has indicated how many people are buying Starter Edition, which is available in developing areas, includings Brazil, India, Indonesia, Malaysia, Mexico and Thailand.

Microsoft also demonstrated a more powerful version of its Hotmail Web-based e-mail program. This version of Hotmail, still in a test phase, works a lot more like desktop e-mail programs such as Outlook and Outlook Express, offering options such as a preview of incoming e-mails, antiphishing features and the capability of blocking and unblocking specific senders. The company's move comes amid a renewed battle over Web-based e-mail, which has Google, Yahoo and others competing to offer more storage and other features in an attempt to win consumers.

Meanwhile, Microsoft has enlisted some outside help for one of the most anticipated new features of its updated Web browser: the ability to alert people that they may be about to enter a fraudulent Web site.

The company tapped WholeSecurity, a maker of computer security programs in Austin, Texas, to help Internet Explorer 7 identify sites designed to trick people into disclosing personal data to identity thieves, the companies said. These "phishing" sites mimic legitimate sites, such as those of eBay and Citibank, and have contributed to a national identity theft epidemic.