By now, you've seen how Microsoft (NASDAQ:MSFT) blew the market away with its fiscal first-quarter earnings report.

Not only did Mr. Softy report better-than-expected revenue and earnings, but its $1.47 billion in deferred revenue -- a rough proxy for demand for its newly released Windows 7 operating system -- was better than the $1.1 billion to $1.3 billion management had projected last quarter. That at least suggests both strong consumer interest and above-average interest from hardware partners, such as Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ).

Skeptics will tell you that Microsoft is a hanger-on, and that Windows 7 won't much matter. "The question is will corporations [whose] systems are dependent on XP and older versions of [Internet Explorer] each spend millions in the next year to switch to 7," wrote Motley Fool CAPS investor kevhead64 last week. This Fool envisions chief information officers refusing 7 as they did Vista:

This is an issue for major corporations who are still using programs such as IE6 because of compatibility issues with newer versions of Microsoft products and their own software applications. I can already tell you deploying a 7 customized clean image isn't as simple as XP. Will corporations be willing [to dedicate] resources to this new system in the next year? [I'm] saying no.

I'm not so sure. Reviews of Windows 7 have been largely positive, with some comparing 7 favorably to Apple's (NASDAQ:AAPL) business-savvy Snow Leopard edition of Mac OS X. Clearly, there's room for debate.

That's true even among investors. Those following Microsoft in our 140,000-strong CAPS database, as a group, remain undecided:



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Sources: CAPS, Yahoo! Finance.

Data current as of Oct. 26.

I'm standing with the bulls at current prices, for the same reason CAPS All-Star Melaschasm is. "During the months leading up to the launch of Vista, I heard lots of bad things from my IT friends. Leading up to the launch of Windows 7, I am hearing mostly good reports," this Fool wrote.

Precisely. For as clever as Apple's new ads have been -- ads that play on fears that migrating to Windows 7 from XP will be difficult, and that it would be easier to simply move to a Mac -- Microsoft is still by far the world's most dominant supplier of computer operating systems. Windows 7 should help Mr. Softy to continue that tradition.

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