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Microsoft has confirmed that it is planning for Windows 7 to hit retail shelves and start showing up on new PCs on October 22. The entire personal computer industry is gearing up for Microsoft’s day when Microsoft release Windows 7.

Microsoft and partners such as Hewlett-Packard, Dell, and Acer will benefit from the Windows 7 debut. PC makers will be rolling out a raft of eye-catching new models. Microsoft downplays the hassles of upgrading to the new operating system and says most people are going to buy new PCs anyway, which means they won’t install the software themselves. “For the vast majority of people that get Windows 7, most will move to new hardware,” says Parri Munsell, Microsoft’s director for consumer product management.

PC makers are likely to benefit from their machines being much cheaper than Apple’s, especially given the soft economy. The average price of a Windows PC is $537, compared with $1,434 for a Mac, says analyst Stephen Baker of researcher PC Data. “I just don’t think you’re going to have a huge influx of people who have perfectly good XP machines deciding they need to buy an all-new Mac,” he says.

In other side, Apple as Microsoft’s competitor is quietly planning to capitalize on the launch, too. “It presents a very good opportunity for us,” says Philip W. Schiller, Apple’s senior vice-president for marketing.

In the coming weeks, Apple is expected to hit those computer buyers with advertising aimed at luring them to its Macs. It will likely make the case that Macs are less susceptible to viruses and are best suited to its popular iPods and iPhones. And look for it to poke fun at Microsoft for making XP owners go through an arduous process to upgrade to Windows 7—one that includes backing up all their files to an external drive, reformatting their PC, and then reinstalling all of their old programs, assuming they still have the CDs. “Any user that reads all those steps is probably going to freak out. If you have to go through all that, why not just buy a Mac?” says Schiller.

Microsoft had better get a move on with Windows 7 or else 2009 could be the year the corporate world will not only be saying good-bye to XP and Vista but to Windows altogether in favor of Mac OS X or Linux.

Microsoft has said that Windows 7 will come in five different editions in most markets–Starter, Home Premium, Professional, Enterprise and Ultimate. A “Windows 7 Basic” will also be sold in emerging markets, Microsoft said.

For emerging markets, for example, Microsoft needs to have lower-priced versions. As a result, Microsoft plans the severely limited Windows 7 Starter as well as the bare bones, but relatively full-featured home basic version. Volume license customers will be able to get an enterprise version that includes BitLocker encryption and a couple of other enterprise-only features. For consumers who really want access to those features, there will again be an Ultimate version of the operating system.