Microsoft Corp. said Thursday it will slash prices for the Windows 7 computer operating system by 17 percent compared to its predecessor in an effort to revive sales of its flagship product.

Windows users in the U.S. will be able to preorder Windows 7 Home Premium for US$49.99 starting Friday.

For those waiting until the October 22 release date, a Windows 7 Home Premium upgrade will cost $119.99 and the full package will retail for $199.99.

The Windows 7 Professional upgrade will cost $199.99 and the full system will be $299.99. For Windows 7 Ultimate, the upgrade version will retail for $219.99 and the full version will set you back $319.99.

The Redmond, Wash.-based software maker also said that customers who buy PCs before the new system goes on sale in October will get free upgrades.

Microsoft said it will cost people $120 to upgrade their existing version to the Windows 7 Home Premium version, $10 less than the comparable Windows Vista package. Upgrades to the Professional and Ultimate versions will cost $200 and $220 respectively, the same as Vista.

The cost is identical regardless of whether the upgraded machine was running Windows XP or Windows Vista.

By comparison, Apple Inc. said in early June that upgrades to its newest operating system, called Mac OS X Snow Leopard, will cost $30.