It's only a stopgap measure, everyone knows. It's a temporary reprieve for XP. Just the same, netbooks are allowing XP, the operating system Microsoft tore from its loyal public last year, to make a comeback.

Last year I tried to get a new computer but was so badly abused by Vista I took it back and reformatted my old computer so I could avoid the demanding operating system.

If imitation is the sincerest form of flattery, Microsoft (NASDAQ: MSFT) must love Apple's (NASDAQ: AAPL) chain of retail stores. But, will it help Redmond to have stores of its own?

Setting up a Microsoft store is probably going to be difficult. Apple has a fairly limited number of products. Will Microsoft have its Xbox in the stores? How about its Zune of PCs running the new Windows 7 OS? Will it display business software for servers?

According to Reuters "Microsoft Corp announced plans Thursday to open its own chain of branded stores as it looks to catch up with rival Apple Inc's successful move into retailing."

It is fairly rare that investors question Apple's (NASDAQ: AAPL) spending. But, its marketing budget keeps growing and, with brands that are already known worldwide, the question is whether that is a good use of money.

According to The New York Times, "While other technology companies curtail their ad budgets to ride out what appears to be an intense and protracted recession, Apple, based in Cupertino, Calif., said in its most recent earnings report that it actually increased marketing and advertising during the last three months of 2008." Apple is particularly fond of going after Microsoft's (NASDAQ: MSFT) Vista program.

This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.

When Microsoft Corp. (NASDAQ: MSFT) released its Windows Vista operating system product almost two years ago, the market was initially excited. That excitement turned to boring indifference as customers, both business and consumer, realized that this was just another update to Windows. Nothing revolutionary, or even evolutionary (in many minds). The problem was this: Windows Vista was a huge change under the hood, but where its users interact with it, it seems like a boring reinvention of an operating system from half a decade ago.

But Microsoft doesn't just make operating systems. It's into the office productivity business (Microsoft Office, anyone), it's big into the mobile business (Windows Mobile), and it's tried desperately to compete with Google Inc. (NASDAQ: GOOG) in the web search advertising business (which has largely failed). So, the company, which continues to make a ton of cash every quarter by selling Windows on all those global PCs that are sold, has no debt and a ton of cash under the mattress. It's still a boring company with a business model that's being made rapidly outdated by the internet and web-based competitors. Should it take its cash, return it to shareholders, and close up shop? Though this was suggested of Apple Inc. (NASDAQ: AAPL) some time back, that company roared back (maybe you've heard). Can Microsoft?

On June 30, 2008, the last PCs with Windows XP were sold (theoretically) and Microsoft (NASDAQ: MSFT) went hard on Vista, its less than celebrated operating system. I was one of the hold outs, opting to buy my laptop with Windows XP last year even though Vista was being touted as the latest and greatest system. Today, I am sure the remaining XP devices are going for a premium.

What does this mean for the future of PC sales? I think there will be some measure of reduced PC sales in the short run just because the economy is already suffering and consumers and businesses are looking to stretch their devalued dollars.

It also means that some people that do not want the burdensome Vista system and all the baggage that goes along with it will be opting for Apple (NASDAQ: AAPL) Macs. There are many people like me who have been weighing the switch to a Mac for a while. The rest of my household has made the switch (4 Macs, 1 PC) and I did consider this prior to my last purchase. I may swing the other way next time.

For other PC users who remain satisfied with XP, they may not only think to stretch their dollars, but try and hang onto their PCs longer until the value proposition for Vista becomes more convincing. I can always add more memory or speed to my existing computer.

I do not know what the trade-off is for Microsoft. It would make money selling the XP system as well as the Vista system. Any slowdown of PC sales or continued movement toward Apple products has to hurt revenue a little?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.

Dell (NASDAQ: DELL) seems to be positioning itself as the de facto corporate champion of saving XP and saving its customers from Microsoft's (NASDAQ: MSFT) much-maligned Vista operating system. Dell announced it would charge $20 to $50 extra to some customers to "downgrade" to Windows XP. Dell even puts the "downgrade" in quotes, the idea is so ridiculous. In reality the fee is more like $100-150 because many customers will have to upgrade their version of Vista to downgrade to XP.

On the surface, this extra charge may sound like bad news, that getting XP is going to be even more difficult. But I see this as a way for Dell to ensure there is still some legitimate way to keep getting XP even after June 30, when Microsoft wants to kill it off.

There's been much speculation about whether Microsoft would relent and postpone the demise of XP another time. I also take this news to mean that it will not. Time's up. In some ways the deadline was just moved up to June 18--that's when Dell stopped pre-installing XP.

A recent study by Evans Data Corporation shows that developers don't like Vista any more than the rest of us. Six times as many are clinging to XP than switching to Vista. Only 8% of developers are working on programs to run on Vista, compared with 50% who are writing for Windows XP. That's not good news for Microsoft (NASDAQ: MSFT), who hopes that its customers will grudgingly tolerate the withdrawal of XP on June 30.

Many are begging Microsoft to relent, especially InfoWorld. The developers do plan on doing more work for the troubled operating system next year, but still not as many as are hanging onto XP. Next year, 24% of developers expect to target Vista while 29% will still work with XP.

Evans data doesn't say how much the Vista disaster has helped Linux and Apple (NASDAQ: AAPL), but it's clear Vista has sent many fleeing. eWeek reported last week that Apple now has a 14% market share -- nearly four times what it had in 2005. Using data from NPD Group, eWeek points out that Apple sells two out of three computers in the $1,000 and above category. That's largely because Macs are still way, way more expensive than PCs. If Apple ever got around to offering a computer at a price the masses were willing to pay, Microsoft might be in trouble. Microsoft may not hear the complaints about its operating system, but it understands that people want to pay less for computers.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• ADC Telecommunications Inc. (NASDAQ: ADCT) beat Q2 estimates and raised its full-year guidance.
• Alcoa Inc. (NYSE: AA) near-term earnings prospects led to an analyst downgrade.
• Banco de Chile (NYSE: BCH) earnings prospects after an acquisition led to an analyst's upgrade.
• Benihana Inc. (NASDAQ: BNHN) posted lower Q4 profits but still beat earnings estimates.
• Bob Evans Farms Inc. (NASDAQ: BOBE) reported solid Q4 results due in part to cost management.
• Brown-Forman Corp. (NYSE: BF.B) easily beat Q4 estimates and offered full-year guidance.
• CMGI Inc. (NASDAQ: CMGI) lowered its guidance, sending shares tumbling 25%.
• Coca Cola Hellenic Bottling Co. (NYSE: CCH) warned of weaker earnings due to economic conditions.
• Conn's Inc. (NASDAQ: CONN) reported solid Q1 results and issued in-line guidance for the year.
• Dick's Sporting Goods Inc. (NYSE: DKS) earnings prospects impress analysts despite recent guidance.
• Guess? Inc. (NYSE: GES) topped Q1 expectations due to strong international expansion.
• Krispy Kreme Doughnuts Inc. (NYSE: KKD) swung to a Q1 profit despite falling revenues.
• Lehman Brothers Holdings Inc. (NYSE: LEH) posted a bigger-than-expected loss on further write-downs.

We've known for a long time that Vista has been aggravating Microsoft (NASDAQ: MSFT) customers, both personal and corporate. More than 200,000 aggrieved customers have signed InfoWorld's Save XP petition to keep selling the old operating system past its current deadline of June 30. BusinessWeek reports today that Wall Street is increasingly concerned that Vista may even hurt Microsoft's bottom line.

It would take an issue of monumental proportions to move a behemoth like Microsoft. Could Vista be that bad? BusinessWeek's Aaron Ricadela cites a Sanford Bernstein report by Charles Di Bona estimating that Vista will clip Microsoft earnings by $395 million or 2 cents a share for FY2009. That's a lot of money, but Microsoft has earnings of over $14 billion.

The issue is that businesses are becoming wary of all the problems they've heard about (memory hogging, incompatibility with software and hardware, pestering prompts, propensity for crashes). So they're increasingly deciding to stick it out and wait for the next operating system, Vista 7, which won't be out until 2010 or 2011 (and then, like Vista, may take time to work out the kinks). Bernstein did a survey and found that only about a quarter of IT pros expect to be using Vista by 2011, down from about two-thirds a year ago.

There is nothing wrong with borrowing other people's ideas, especially if they are good ones. Microsoft (NASDAQ: MSFT) is showing off new features of the future version of Windows. One of the most significant advances is that the software will work with touch-screen technology. That would make it a lot like the Apple (NASDAQ: AAPL) iPhone.

According to The Wall Street Journal, "A key feature of the technology allows for multiple touches simultaneously; for instance, dragging five fingers across a screen would draw five separate lines." Nifty. Whether it has practical applications is still hard to tell.

One of the byproducts of the Microsoft's feature is that use of a keyboard will become less necessary. Whether PC users will be able to type on a touch-screen remains to be seen.

Critics may argue that Microsoft wants to distance itself from its latest versions of Windows, Vista, which has received a great deal of criticism. The other possibility is that Microsoft simply wants to build software that works better. Fancy that.

Douglas A. McIntyre is an editor at 247wallst.com. and author of the Ten Stocks Under $10 letter.

Because a long, holiday weekend can be a great time to pause and reflect -- to take a step back and look at the bigger picture -- here are some highlights from BloggingStocks a year ago today: May 25, 2007.

• Consumers and investors alike were eager for the launch date of Apple Inc.'s (NASDAQ: AAPL) ballyhooed iPhone.
• Coca-Cola Co. (NYSE: KO) announced its acquistion of Vitaminwater.
• Online retail shopping was on the upswing.
• Dell Inc. (NASDAQ: DELL) planned to begin offering its products at Wal-Mart Stores Inc. (NYSE: WMT).
• Declining new home sales in April signalled more weakness in the housing market.
• Home Depot's (NYSE: HD) new CEO began the 2007 annual meeting with an apology.
• Microsoft Corp. (NASDAQ: MSFT) denied rumors about its interest in acquiring Yahoo! Inc. (NASDAQ: YHOO).
• BloggingStocks speculated about the blue chips of 2017.
• Georges Yared reflected on the state of the market conditions and prospects for the future: Part 1 and Part 2.

And two years ago, May 25, 2006:

• Microsoft admitted that there would be delays in the relase of its Vista operating system.
• Ken Lay and Jeff Skilling were found guilty of defrauding Enron investors.

Microsoft Corporation (NASDAQ: MSFT) shares are trading higher as several analysts predicted good things to come from the company's earinngs report later this week. Also lifting shares is a report that one technology analyst thinks that MSFT could be soon distancing itself from the failed Vista experiment. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on MSFT.

After hitting a one-year high of $37.50 in November, the stock hit a one-year low of $26.87 in March. MSFT opened this morning at $30.19. So far today the stock has hit a low of $30.12 and a high of $30.60. As of 12:45, MSFT is trading at $30.43, up 43cents (1.4%). The chart for MSFT looks neutral but improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $27 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.1% return in just four weeks as long as MSFT is above $27 at May expiration. Microsoft would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.

MSFT hasn't been below $27 by more than a few cents in the past year and has shown support around $29 recently. This trade could be risky if the company's earnings (due out on Thursday) disappoint, but even if that happens, this position could be protected by the support the stock might find around $28, where it bounced twice in the past month.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent owns and controls bullish hedged positions in MSFT.

Microsoft (NASDAQ: MSFT) says it will sell its older OS Windows XP for another two years. The company announced that "the extension is designed only for ultra-inexpensive desktop and laptop PCs too limited to run the Windows Vista system," according to The Wall Street Journal. XP was supposed to go away because it is old.

The explanation sounds bogus. Microsoft's new OS Vista has had reasonable sales, but reviews of the software say that it is full of bugs and does not help PCs work well with other devices like printers. Apple (NASDAQ: AAPL) has been pushing its OS not just for Macs but directly into the PC market. The company claims that its product works better than Vista and it appears that some consumers are buying into that claim.

There have also been reports that some corporations do not want to upgrade to Vista and will keep the old Microsoft OS running until a version after Vista is produced.

The Microsoft move may have a silver lining. Customers and businesses that want the latest and most powerful Microsoft product can buy Vista. Those who are concerned about the software can use XP, instead of considering the Apple alternative.

Douglas A. McIntyre is an editor at 247wallst.com.

Two pieces of news have come out of Microsoft (NASDAQ: MSFT) in the last day. One is that the software company will cut the retail price of Vista. The other is that Microsoft knew that the specs for the new operating system encouraged users with slow machines to buy the software. Redmond was aware that Vista would not run well on low-end machines.

The price cut may be a sign of weakness. Microsoft says Vista has sold well, but many people have stayed with older versions of Windows to save money and because Vista has received mixed reviews. Performance problems on inexpensive machines has probably not helped matters.

The cuts are for consumer versions of the software. According to The Wall Street Journal, "The changes are seen as a response to the falling prices of new PCs, which made the software price seem disproportionately large in comparison to that of a new system with Vista installed."

That reasoning seems a bit thin. Reaction to the OS has been lukewarm. Apple's (NASDAQ: AAPL) new operating system has received better reviews and that may be helping the Mac take market share from PCs. PC companies may well have pressured Microsoft to drop prices.

A weak product is not something that a flagging PC industry needs.

Douglas A. McIntyre is an editor at 247wallst.com.

The earnings crunch is in full swing, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

• Abbott Laboratories (NYSE: ABT) swung to a profit on the strength of drug sales.
• AK Steel Holding Corp. (NYSE: AKS) swung to a fourth-quarter profit and easily beat estimates.
• Aladdin Knowledge Systems Ltd. (NASDAQ: ALDN) posted solid results and raised its forecast.
• Amdocs Ltd. (NYSE: DOX) reported a record quarter and reaffirmed its guidance.
• Amgen Inc. (NASDAQ: AMGN) beat exectations, but concerns remain about FDA scrutiny.
• Apple Inc. (NASDAQ: AAPL) easily beat expectations and offered revised guidance (see live blog, transcript).
• Caterpillar Inc. (NYSE: CAT) posted a solid quarter on strong international growth.
• Coach Inc. (NYSE: COH) beat estimates on strong direct-to-customer and same-store sales.
• ConocoPhillips (NYSE: COP) posted a strong fourth quarter due to rising oil prices.
• CSX Corp. (NYSE: CSX) beat expectations as increased productivity offset increased fuel costs.
• Eaton Corp. (NYSE: ETN) posted solid fourth quarter results due to growth overseas.
• Equity LifeStyle Properties Inc. (NYSE: ELS) beat expectations in the fourth quarter and offered guidance.
• Franklin Resources Inc. (NYSE: BEN) reported solid results and increased its quarterly dividend.
• Johnson & Johnson (NYSE: JNJ) posted a solid fourth quarter and affirmed its 2008 guidance.
• Microsoft Corp. (NASDAQ: MSFT) posted strong results due in part to demand for Vista.
• Nintendo Co. (OTC: NTDOY) profit soared on demand for the Wii, and the company raised is sales outlook.
• Nokia Corp. (NYSE: NOK) reported a strong fourth quarter and increased market share in handset sales.