Are you feeling stuck between Vista's rock and an old XP hard place? Well, the rock will be replaced very soon so the hard place can drift away into the mists of time. Microsoft (NASDAQ:MSFT) is putting Windows 7 in our grubby little hands come October 22, 2009.

The news
Speaking at the Computex IT trade show, Microsoft VP of OEM operations Steve Guggenheimer confirmed that Windows 7 will indeed make it out before the critical holiday season. An upgrade program should cover consumers who want to buy a laptop for back-to-school reasons without getting stuck with an outmoded or outcast operating system.

In its initial release, Vista was a resource hog, less reliable than Windows XP, and more limiting than freeing to the end-user. It also gave Apple (NASDAQ:AAPL) a window to steal market share from the leading Windows platform.

The environment
As Windows 7 steps into the fray, Microsoft is facing entirely new challenges. Apple is still a strong competitor, Linux is coming into its own through consumer-friendly distributions like Ubuntu, and the rise of the netbook system places new demands on the operating system. To run efficiently on the rather limited hardware of a typical netbook, you need a platform with a user-friendly interface on small screens, along with low demands on memory, processing power, and other computing resources.

And so the Dell (NASDAQ:DELL) Inspiron Mini runs XP instead of Vista, with an Ubuntu option. The Hewlett-Packard (NYSE:HPQ) Mini 1000 also gives you a choice between Linux and XP.

The typical netbook might not be representative of what a business user or consumer wants or needs today, but IT research firm Gartner also says that 75% of corporate systems still run the eight-year-old Windows XP or the even older Windows 2000. Windows 7 must overcome a huge wall of worry here, since Microsoft's last effort was so darn uninspiring, to say the least.

Laptops are getting smaller and less impressive while smartphones only get more powerful. The convergence of those two trends is putting the Google (NASDAQ:GOOG) Android operating system (originally designed for use in mobile phones) on netbooks from the likes of Acer and Elitegroup. Some of these may even turn up through mobile service providers like AT&T (NYSE:T) or Verizon (NYSE:VZ), who are now selling netbooks as well as mobile phones, under the network's brand rather than their own.

The investing takeaway
Nonetheless, Microsoft looks prepared for these challenges. Windows 7 was designed with the red-hot netbook market in mind, so it's a fair fight. And both corporate and retail customers may jump on the chance to get out of the XP-versus-Vista dilemma when October comes. Unless 7 turns out to be another disaster -- which I seriously doubt -- it looks like Microsoft is going to make a lot of fresh operating system sales this fall. And isn't that what the company is all about, anyway?

It's back to the basics for Microsoft, and that makes me like both the company and the stock again.

Further Mr. Softy Foolishness:

Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor pick. Dell and Microsoft are Motley Fool Inside Value picks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. He runs Windows 7 in an open-source virtual machine atop Ubuntu, with a heaping side of irony. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.