Cash-strapped consumers have been slow to buy personal computers in the recession. But with the launch of Microsoft Corp.’s (MSFT) new Windows 7 operating system Thursday, PC makers are aiming to reverse that trend–and then some.

Companies are expecting that Windows 7’s improved features over earlier Microsoft operating systems, including Vista and XP, will lure more consumers into stores. And they are betting that heightened demand will allow them to stanch recent price declines in the market.

Hewlett-Packard Co. (HPQ), Dell Inc. (DELL), Toshiba America Inc. and Acer Inc., among others, are releasing a flood of high-end laptops with slim cases and glossy designs, and new one-piece touch-screen desktops, that they hope consumers will be willing to pay a premium for.

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Microsoft (MSFT) is about to find out whether it can prevent further defections to the Macintosh among college students by charging less for Windows 7 than a typical textbook.

On Thursday, the company announced on Twitter that college students in the U.S. can upgrade their PCs to Windows 7 Home Premium edition for only $29.99, as long as they have a genuine copy of Windows XP or Vista already installed on their systems. That’s a quarter of the $119.99 Microsoft currently charges everyone else for an upgrade to the same version of Windows 7.

The details about the offer are on a special Web site Microsoft set up. There are a couple of catches: Customers have to have a dot-edu email address to prove they’re affiliated with a college, and their $29.99 buys them a version of Windows 7 that they can download Oct. 22 when the operating system becomes available, not a DVD.

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Hewlett-Packard (HPQ) CFO Cathie Lesjak says the company does not expect the debut of Microsoft (MSFT) Windows 7 to trigger a major PC refresh cycle.

“We think it looks like a good product, one that folks will really like, but we don’t think it is different enough to drive a refresh cycle,” she said in an interview this afternoon with Tech Trader Daily following the company’s Q3 earnings report. “It’s kind of the way we though about Vista. Over time, folks will move. Others are calling for more of a hockey-stick effect, but we’re not counting on it at this point.”

Meanwhile, Lesjak says the company believes business conditions overall are stabilizing. She said U.S. and China demand stabilized last quarter, and that the trend spread into the Asia Pacific region in the July quarter.

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I’ve got to say: in my opinion, Microsoft has turned The Corner. You know The Corner. The one that gets us off of pothole ridden Vista Avenue (one street over from Lincoln in Blue Velvet). The Corner that requires Microsoft to shed some of the fat it has layered on recently just to make the turn without flipping.

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While it’s true that Apple has significantly grown its share of the desktop operating system market since the release of Windows Vista in November of 2006, the company’s market share remains below 10 percent, and it actually dropped in the first quarter of 2009, according to Gartner’s Worldwide PC Shipment report.

To most observers, it’s fairly clear that Vista’s failings gave people a reason to take a fresh look at the Mac.

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Microsoft (MSFT) announced plans to open retail stores, hoping to boost visibility of many of its products and its brand. The move seems to be an effort to mimic the success that Apple (AAPL) has had with its retail stores. The news is just too tempting not to have some fun with. So here are some yet-to-be-officially-revealed details about the Microsoft stores.

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Canaccord Adams software analyst Peter Misek today cut his rating on Microsoft (MSFT) to Hold from Buy, while lowering his price target to $24 from $30.

Misek cited two reasons for his more cautious stance. One, he thinks consensus estimates are overly aggressive given the worsening macro spending environment. Misek points out that Microsoft had based its guidance on seeing some improvement in conditions in the second half of the year; Misek says he now questions the validity of that assumption. And two, he sees increasing competitive threats. In operating systems, he notes that the company has lost some share to Apple (AAPL); he thinks some PC OEMs may be looking at competitive alternatives to Vista, including Linux and OS X.

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I’ve been a pretty big fan of Microsoft’s Bill Gates and Jerry Seinfeld ads. No, it’s not because I’m such a Seinfeld fanboy (I am though) or that I enjoy watching Bill Gates perform the robot on cue.

Instead, I look at the Seinfeld ads as a way for Microsoft to turn the company’s poor public image into a positive image that will help it finally fix its Vista PR woes.

But after buckling under the pressure of “what is this about?” articles, Microsoft has shelved the Seinfeld ads (they may or may not come back) and has instead started attacking Apple by explaining exactly what a PC is. (Editor’s note: Microsoft says the move away from the Seinfeld ads was always planned.)

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It’s the seventh inning, and Microsoft finally hits a marketing home run. Is it a gamer winner? If the competition were Apple, which surged to 8.5 percent U.S. PC market share in the second quarter, the answer would be yes. But Microsoft faces its toughest competitor ever: Itself. I spent some time this morning reviewing the candid—and arguably craftily edited—”Mojave Experiment” videos. As I explained yesterday, Microsoft conducted a focus group with people with negative attitudes about Windows Vista. They were shown what was supposed to be new Windows version “Mojave,” but it really was Windows Vista. Microsoft’s new “Mojave Experiment” Web site, which went live today, is the resulting marketing collateral.

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My colleague Mark Ververka is up in Redmond today for the Microsoft (MSFT) Financial Analysts’ Meeting, where the company is trying to convince the Street that it has a viable online strategy. Here’s Mark’s latest update from the scene:

One thing is certain. You can’t say that Microsoft CEO Steve Ballmer isn’t accessible. Not on this day of the year at least.

The CEO has patiently been addressing analysts’ questions in the buffet line, at his lunch table and in the hallways. At lunch, a ring of curious attendees three and four people deep circled his table, listening intently as Ballmer fielded queries about Yahoo (YHOO), Vista, financial processes and life without Bill.”

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General Motors may take a detour around Vista, the latest computer operating system from Microsoft. The automaker has encountered so many speed bumps getting Vista to work on its machines that it may just wait for the next version of Windows, due in 2010 or 2011. “We’re considering bypassing Vista and going straight to Windows 7,” says GM’s Chief Systems & Technology Officer Fred Killeen.

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“Hey! Ho! Time for Ballmer to Go,” a Wired.com headline proclaimed on Tuesday. My rejoinder: “Hell, no. There are no Softies ready for a promo.” Wired’s story attempts to make a case for CEO Steve Ballmer taking the hits for Vista’s less-than-stellar market reception, as well as the so-far-unconsummated Yahoo-Microsoft merger. “Other CEOs have gotten canned for lesser crimes,” Wired concludes. There’s just one problem, as Wired notes in an aside. No one’s ready to step up within the company and fill Ballmer’s big shoes.

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Microsoft is nothing if not responsive to its customers. In fact, it’s hyper-responsive. That’s why we’ve ended up with feature-bloat in both Microsoft Windows and Microsoft Office, as the company has tried to please everyone by including everything-but-the-kitchen-sink in its software. And that’s why Microsoft will ultimately try to quell the embarrassing Windows Vista debacle by making a bold move with Windows 7 to win back customer loyalty and generate positive spin for its most important product.

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Windows’ enterprise adoption declined in 2007, with the gains going to Linux and Mac OS. Vista is a bust. Forrester published the data on March 27, but only released it publicly today. Forrester surveyed a whopping 50,000 users at over 2,300 large to very large enterprises throughout 2007.

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Conventional wisdom seems to be that existing Microsoft customers won’t leapfrog Windows Vista and wait for “Windows Seven,” currently expected in 2010. There’s a feeling of inevitability about the transition, as if it’s just a question of when to write the checks to Microsoft and do the tedious work of switching operating systems. Yet as Vista celebrates its first birthday, the chances are increasing that many users will never see it on their desktops.

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