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IDG News Service - Microsoft Corp. plans to continue offering Windows XP to hardware vendors for use on netbook PCs for a year after the upcoming release of Windows 7.

"OEMs that are using Windows XP on netbooks will have the ability to install Windows XP for one year — 12 months — after Windows 7 general availability," Mike Nash, corporate vice president of Microsoft's Windows product management group, said during a conference call with reporters.

The continued availability of XP during the transition period after Windows 7's release could reassure netbook users who have avoided upgrading to Windows Vista and may be wary of immediately installing the new operating system, in part because of Microsoft's plan to offer it for netbooks in a Starter Edition that will only be able to run three applications at a time.

Thanks largely to XP, Windows-based systems accounted for more than 90% of all netbook shipments from November through January, according to market research firm NPD Group Inc. But Microsoft's success in taking the netbook lead away from Linux has a downside: the company said its Windows client revenue dropped 16% in the last quarter, partly because of a shift toward the lower-priced XP Home edition that is typically installed on netbooks.

Nash declined to say when Windows 7 will be released commercially, although Microsoft is starting to make its Release Candidate (RC) version of the new operating system available today to subscribers to its MSDN and TechNet services. The company plans to make the RC publicly available next Tuesday. The distribution of the RC is expected to be one of the last steps before the Windows 7 code is locked down and sent off to manufacturers.

Microsoft's reluctance to disclose a specific release date for the operating system is understandable. The PC market is in a fragile state, with shipments much lower than last year. Preannouncing the release date of Windows 7 could convince some users to delay buying new computers, further depressing the market.

It isn't clear what effect Windows 7 will have on netbook pricing. Nash declined to comment on pricing for the operating system, even in relative terms. But he claimed that users of netbooks and other types of PCs will like what they see when the Windows 7 is released, especially if they're using Vista now.

"It's been a long time since we've had a version of Windows that will actually run better [than the previous version] on the hardware that most customers have," Nash said.