Microsoft Corp launched Windows 7 on Thursday, its most important release in more than a decade, aiming to win back customers disappointed by Vista and strengthen its grip on the PC market.

The world's largest software company, which powers more than 90 percent of personal computers, has received good reviews for the new operating system, which it hopes will grab back the impetus in new technology from rivals Apple Inc and Google Inc.

They met expectations but that was pretty much it, said Michael Gartenberg, a long-time Microsoft analyst at market research firm Interpret after a launch event in New York. They showed off some very cool things, but now they have to keep the momentum going.

The new system -- which is faster, less cluttered and has new touch-screen features -- comes almost three years after the launch of Vista, whose complexity frustrated many home users and turned off business customers.

The success of Windows -- which accounts for more than half of Microsoft's profit -- is crucial for Chief Executive Steve Ballmer to revive the company's image as the world's most important software company.

Windows 7 is a chance for us to let the PC be not only more interesting but just simpler and faster for the many, many hundreds of millions of people who use them, Ballmer told Reuters Television in an interview on Thursday.

NEW HARDWARE

Ballmer and other executives demonstrated at the event a range of new devices showing off Windows 7, from ultra-slim laptops to large touch-screen computers, highlighting a new Kindle book-reading application from Amazon.com Inc and live-streaming CBS television shows.

Crowds lined up overnight to see the new software and check out the latest PCs at the first branded Microsoft store, which opened on Thursday in Scottsdale, Arizona.

Microsoft is charging $199.99 for the Home Premium version of Windows 7, or $119.99 for users seeking to upgrade from older versions of the operating system -- well below comparable prices for Vista.

It also has a range of offers in conjunction with retailer Best Buy Co Inc and PC makers such as Dell Inc and Acer Inc.

The U.S. holiday season will soon reveal whether consumer PC sales get a kick from Windows 7, but success with corporations -- the key to Microsoft's financial power -- will not be clear until next year, analysts say.

Windows 7 sales will not immediately impact the bottom line of Microsoft, which is expected to post a lower quarterly profit on Friday.

The company's shares closed up 1 cent at $26.59 on Nasdaq. They are up 79 percent since early March. (For a graphic showing major Windows releases and Microsoft's share price, click on http://graphics.thomsonreuters.com/109/US_MSFT1009.gif)

SHARES UP

Global PC sales rose 2.3 percent in the third quarter compared with a year ago, according to research firm IDC, after two quarters of declines.

Market-watchers are betting on further recovery of computer sales next year, as the economy improves and businesses replace old machines, but opinion is divided on how strong the impact of Windows 7 will be.

It's the chance to encourage corporations to update their computers, to get families to upgrade or put in a second or third computer, Ballmer told Reuters TV. I am optimistic, but we have the economy.

That won't necessarily happen, said Brendan Barnicle at Pacific Crest Securities.

What's going to be really interesting is whether this spurs a hardware replacement cycle or it's just a Windows replacement cycle, said Barnicle, who estimates that more than 820 million PCs across the world run Windows.

(Reporting by Bill Rigby; Additional reporting by Jim Finkle, Wojtek Dabrowski, Bobbi Rebell and Gabriel Madway; Editing by Tiffany Wu, Richard Chang and Carol Bishopric)

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