Updated from 12:40 p.m. EST

Editor's note: This marks the debut of a new series of articles on TheStreet.com pitting two big companies against each other. Today, Apple vs. Microsoft.

In the first of TheStreet.com's Archrivals series, Apple ( AAPL) and Microsoft ( MSFT) face off in the battle of the operating systems.

Investors will be looking to see how both firms boost their sales through state-of-the-art operating systems such as Microsoft's Windows 7 and the latest version of Apple's Mac OS X, dubbed Snow Leopard. With Apple said to be unleashing Snow Leopard sometime this year, and Microsoft gearing up for Windows 7, the tech sector is preparing for a clash of the OSes.

Read Gary Krakow's product-based review of these operating systems here.

Like so many other tech firms, Apple and Microsoft have taken a pounding in the stock market during the last six months, raising the stakes considerably for their OS upgrades.

Microsoft, which missed analyst earnings and revenue estimates in its recent second-quarter results, is desperate to gain traction in markets outside of desktop software, making Windows 7 crucial to its long-term strategy.

Confronted with an increasingly bleak economy, some analysts have been pessimistic about Microsoft's growth prospects in the second half of the year, even lowering their estimates for 2009 and 2010.

Windows 7, however, could offset some of this weakness, according to analyst firm Jefferies & Company, particularly if it makes it onto the market before Christmas, as some industry sources suggest.

Oppenheimer maintained its Outperform rating on Microsoft on Tuesday, citing Windows 7 as a catalyst for the software giant's shares. "The upcoming release of the Windows 7 OS could lead to a much stronger consumer upgrade cycle versus Vista," it said, in a note, explaining that this could add from 8 cents to 16 cents in incremental earnings per share.

Microsoft CEO Steve Ballmer has also promised that the mobile version of Windows 7, which is expected to be unveiled sometime next year, will be much closer to the traditional version of Windows in "look and feel." The company wants to close the gap between PCs and phones, according to Ballmer.

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