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Microsoft Sets Vista Upgrade Plan

The new system is expected for consumers in January.

Microsoft

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and major computer makers will allow customers who buy new PCs during the holiday season to upgrade to its Vista operating system - for free or via discount coupons -- when it becomes available.

Customers who buy machines pre-loaded with older versions of Office will be able to upgrade to the new version as well, Microsoft said Tuesday.

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The move is designed to avoid a falloff in PC sales during the most important months of the year for technology vendors. Microsoft expects the software to be available to business customers in November and to consumers in January.

Under standard accounting rules, Microsoft will have to defer some $1.5 billion in revenue from the second fiscal quarter to the third, the company told analysts on Tuesday. The deferral will not affect results for the full fiscal year.

The technology guarantee program, as Microsoft calls it, will run from Thursday until March 15. Exact terms of the offer will vary by PC maker and retailer.

Shares of Microsoft closed Tuesday down 17 cents, or 0.6%, to $28.28.