Showing its upcoming flagship operating system -- dubbed Windows 8 -- Microsoft is packing new features and a sleek as it prepares to encroach into the Apple dominated tablet space.

The company demonstrated its next flagship software platform, promising to usher the company into the world of touch, reviving revenues along the way.

The world's largest software company is expected to launch the new touchscreen friendly software in the next 18 months, as it vies to bridge the technology gap with Apple, and entire the emerging tablet market.

Since the introduction of Apple's iPad, tablet computers are fast growing, siphoning revenue away from Microsoft and other companies reliant on a vibrant PC market. Analyst estimate tablets would account for 32 percent of the expected desktop PC shipments for 2011.

At the Computex show in Taipei, Microsoft executives showed starting pages that resembles Microsoft's latest phone software, Magno, with live 'tiles' manipulated by pressing and swiping the screen.

The new interface will give the Redmond-based company new tools to arm itself as it enters the quickly growing tablet arena, already dominated by rival Apple.

But the changes look promising.

Credit Suisse analyst Philip Winslow told clients that the demo bodes well reinforcing our belief that Windows 8 will have a more meaningful position in tablets than Wall Street appreciates.

Along with the new software, Microsoft's decades large library of software applications should give it an edge over rivals, Winslow contends.

Windows is the only tablet OS able to run Microsoft Office natively, he explains.

Furthermore, given that more than 4 million applications have been written to Windows, the majority being business applications, which is more than 10 times the next OS platform, and because of the added operational costs of supporting an additional OS platform, we believe Windows 8 will be an attractive tablet OS for the business vertical in particular.

Hardware manufacturers of the Microsoft ecosystem also showed their support for the new software.

The fact that it's a year or two years after the iPad doesn't really matter. There is already a lot of built-in infrastructure, Adrian Crisan, Sony's director of engineering for VAIO told reporters in Taipei on Thursday.