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Ed Bott joins us today to discuss the many ways to avoid paying full price for Windows 7.

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Microsoft has begun selling new PCs with no crapware, from the likes of Sony, HP and Dell. Of course, the machines will still come with plenty of Microsoft software that not everyone will want.

You can find these Microsoft Signature PCs at its new store in Scottsdale, Arizona and online.

Guest: Todd Bishop, TechFlash

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Today, Dwight Silverman analyzes new commercials from Apple and Microsoft.

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Windows 7 arrives this week. We asked Lance Ulanoff of PCMag.com to come up with a list of the five best things about the new Microsoft operating system.

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Microsoft has released its free security software package. Does it do the job? We put that question to Dwight Silverman.

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Rival companies Google and Microsoft fight on many fronts -- Internet search and advertising, for example, and operating systems. A newer battlefield is Southern California, where the companies are competing for a $7.25 million contract to provide email and office software for the City of Los Angeles.

The contract fight is significant because it could help determine whether upstart Google is ready for the big time when it comes to its cloud-based apps, according to David Sarno, business reporter for the Los Angeles Times.

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Thousands of people across the country, at the invitation of Microsoft, are hosting Windows 7 release parties next month. Microsoft is giving away copies of Windows 7 Ultimate to party hosts, who are getting some guidance from Microsoft on how to show off the newest version of Windows at their parties.

We wondered who would host such a party, and why?

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Microsoft says it will make lightweight, web-based versions of Word, Excel, PowerPoint and OneNote as part of Office 2010. The "cloud" applications are part of a company push into collaborative document making, according to Microsoft chief strategist and researcher Craig Mundie.

In this interview Mundie also addresses Google Chrome OS and the future of Windows.

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How should Microsoft respond to news that Google will make its own operating system?

Guest: Michael Cherry, Directions on Microsoft

Here is an edited transcript of my interview with Cherry:

Gordon: How is Google's announcement of a new operating system likely being viewed at Microsoft?

Cherry: There's a certain amount of interest when someone else makes claims they can do an operating system. There will be a lot of interest in what are they doing, what are they actually delivering.

I think there will be concern on the part of the company that it could fragment the sales of netbooks into netbooks running the Chrome OS, Windows and Linux distributions. When you add another player into a mix it's going to have some effect.

The missing piece here is while Google promises us there is going to be great applications for this OS, we need to see them. It's those applications that are going to get people to use it. It's not the OS itself.

Gordon: Some people are painting the Chrome OS as sort of a nuclear bomb dropped into the lap of Microsoft, and that it sets up an epic battle. Do you see it that way?

Cherry: Not really. The thing that will keep operating system developers at Microsoft, Apple, and the operating system developers who contribute to Linux distributions doing their best work is alternative operating systems. I think its super for application developers and consumers. So hopefully what Chrome OS does is spur a new generation of applications.

Gordon: How should Microsoft respond to the Chrome OS?

Cherry: The best response is to keep making sure you do your best work with your operating system, that you continue to make it better. To make it a better platform to run applications on than your competition does. That means making sure its fast and secure.

Gordon: I guess the big question for me is will it end up being better to have this sort of Internet-based operating system versus a more traditional OS that sits on your computer and does what Windows does.

Cherry: There is tremendous potential for it in the future. I just don't think we're ready yet. I've yet to find a Web-based application that I'm willing to give up my locally-running counterpart for. Web-based applications don't have all the features I want them to have.

Second, I'm very concerned about storing my data in the cloud. We had a severe outage here in Seattle last week where a large data center that hosted a lot of Web services went down after a fire.

Third, there are a lot of privacy issues related to data. I certainly don't want my data in a Web-based application if a third party is indexing it and going through my data.

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Windows 7 goes on sale to the public this coming October and, based on reviews of various test versions, it's sleeker and better performing than its predecessor, Vista.

But even as the company puts the final touches on Windows 7 some top engineers and executives are working on a replacement operating system that would relegate the aging Windows to computer history museums.

Guest: Mary-Jo Foley, ZDNet

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Future Tense news analyst Dwight Silverman has been putting Microsoft search engine Bing through its paces. He calls it "intriguing."

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A new Zune is on the way. It will feature high definition video and HD Radio, a multi-touch screen, plus Wifi and a Web browser.

Microsoft has not announced a price for the Zune HD, which is due this autumn.

Guest: Dwight Silverman

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Microsoft plans to spend up to $100 million to promote Bing, its re-named and revamped search engine that debuts June 3.

Guest: Abbey Klaassen, Advertising Age

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Today's topics:

1. Kumo
2. John Doe
3. MiFi

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Microsoft's newest TV ad features the computer shopping quest of a hip young woman named Lauren. She has a $1,000 budget and wants a fast laptop with a 17-inch screen. The ad's message: Macs are not for shoppers on a budget.

Do Macs really cost so much more than Windows PCs? We put that question to Joe Wilcox, editor of Microsoft Watch and Apple Watch.

Listener comments:

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Microsoft this week announced a program aimed at boosting the technology skills of up to two million Americans. As part of its Elevate America initiative Microsoft will offer some its training programs and certification tests for free.

The classes range from the basic, like how to use the Internet and send email, to advanced classes for using Microsoft applications.

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Microsoft's Windows 7 operating system, now in a public test phase, looks to be a whole lot better than Vista, which earned a bad reputation for not playing nice with older peripherals and software.

Guest: Ed Bott, ZDNet

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Microsoft announced yesterday it will make the first mass layoffs in its 34-year history, cutting 5,000 jobs over the next 18 months as demand for personal computers falls.

Guest: Matt Rosoff, Directions on Microsoft

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Technology journalist John Brandon recently paid a visit to the Microsoft campus, where he got a peek at some of the company's research projects. He wrote about 10 of those projects on NetworkWorld.com. On today's show we discuss three: Eagle 1, a robotic receptionist, and Lucid Touch.

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Many Americans mistakenly conclude they have a rare illness after attempting self-diagnosis on the Internet, according to a new study by researchers from Microsoft.

The company conducted the study to improve its own search engine.

Microsoft studied health-related Web searches on popular search engines and surveyed 500 of its employees about their health-related searching.

Web search engines can increase our health-related anxieties and lead us to believe worst-case scenarios, said Microsoft's Eric Horvitz, an artificial intelligence expert and medical school graduate.

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Malicious hackers are finding it more difficult to exploits flaws in Windows, so they're going after individual programs instead, according to Microsoft's semi-annual Security Intelligence Report.

Microsoft says security holes in its own software are down by 33 percent in the first half of the year, but the number of serious vulnerabilities is increasing overall.

Microsoft has learned a lot about making secure software over the past few years, said George Stathakopolous, general manager of product security.

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Eager Windows fans are already downloading a very early, unfinished version of Windows 7 via BitTorrent. The successor to Vista is not expected in its final form until 2010.

People who write Windows programs recently got a sneak peak of Windows 7. Many reviewers say the new OS looks quite stable.

Windows 7 is a direct descendant of the much-maligned Vista, according to Future Tense news analyst Dwight Silverman.