The test beta version of the revamped system was introduced at the Mobile World Congress in Barcelona, the planet's largest cell phone trade show, and borrows some of the look of Microsoft's Windows Phone 7 software for Windows 8.
Windows 8 doesn't have the traditional "Start" menu, and applications are spread across a mosaic of tiles in a design Microsoft calls "Metro" -- seen as an attempt by the company as a scramble to preserve its market share. And executives said it powers up on PCs in eight seconds, much faster than the previous version.
The tiles, which resemble road signs, can be navigated with a finger swipe on the screen or with a keyboard and mouse. But those testing out the new operating system won't be able to try out the finger swiping unless they already have systems enabled for touch use, and the system isn't expected to make its official debut until September or October.
Microsoft executives in Barcelona showed off how users can use their fingertips to swipe in and out of applications, and tilt upright computer screens to a flat position so they can be used as two-person gaming boards or big drawing tablets. A slim laptop had a hinge allowing it to be turned inside out so it could be used as a tablet instead.
"It's beautiful, it's modern, it's fast, it's fluid," said Steven Sinofsky, president of Microsoft's Windows division. "Windows 8 is a generational change in the windows operating system."
Microsoft is also opening an Internet "Windows Store" where users can download applications for the operating system, but only if they have Windows 8. Applications are free for those testing out the beta version, but would include both free and paid versions after the operating system is released.
The test version was downloaded by people from more than 70 countries as Microsoft gave its presentation about Windows 8, but the company didn't immediately disclose the number of downloads. The software can be downloaded at http://windows.microsoft.com/en-US/windows-8/consumer-preview.
Apple is also moving features from its iPhone and iPad software over to its Mac software. That trend will be particularly visible in Mountain Lion, the new Mac operating system that's expected to be released this summer.
Windows 8 will also be the first Microsoft software in a long time besides its cell phone software that will run on non-Intel style processors. The company is developing a version that will run on phone-style chips, such as those used in the iPad.
If Windows 8 is a hit, it could help struggling PC makers, including Hewlett-Packard Co. and Dell Inc. Besides giving businesses and consumers a reason to consider new PC purchases, Windows 8 is expected to spawn a new breed of hybrid machines that will be part tablet computer and part laptop like the device that Sinofsky demonstrated.
If Windows 8 is a flop, however, it will increase the pressure on Microsoft CEO Steve Ballmer. His 12-year reign has been marred by the company's troubles adapting to an Internet-driven upheaval. As Microsoft has stumbled, faster-innovating companies such as Apple and Google have elbowed their way into a position to steer the direction of computing for the next decade or two.
Microsoft's financial performance traditionally improves when it releases a new version of Windows. The last upgrade came in October 2009 when Windows 7 hit the market. The company has sold more than 525 million copies of Windows 7 since then. Part of Window 7's success stemmed from pent-up demand; the previous version, Vista, was so clunky and buggy that many PC users stuck with the system they already had on their machines or switched to Apple's technology on Mac computers.
Microsoft shares dipped 13 cents to close at $31.74 Wednesday after the new operating system was introduced. The stock has been hovering around its highest levels since April 2008.
Windows 8 is radically different from its predecessors, with its tiles that provide a glimpse at the activity occurring in applications connected to the Web, such as email.
The system also is expected to enable users to easily back up their pictures, movies, music and other files on a Microsoft storage service called SkyDrive, which will compete against Apple's iCloud.
Julie Larson-Green, head of "Windows Experience" and responsible for delivering a new operating system that wows the world's PC users, showed how documents and data can be stored in one device only to appear instantaneously in another.
"It will populate with everything you are used to using right away," she said.
The operating system's versatility means it can be used to power computer tablets, as well as traditional PCs.
Microsoft badly wants a piece of the tablet market that has been cutting into PC sales since Apple introduced the iPad two years ago.
In the quarter that included the holiday shopping season, Apple shipped 15.4 million iPads, more than doubling the volume from the same time a year earlier. Meanwhile, worldwide personal computer sales dipped slightly, and Microsoft's revenue in its Windows division declined 6 percent. It marked the fourth time in the past five quarters that Microsoft's Windows revenue has fallen from the previous year.
Reversing or slowing that trend is critical for Microsoft. It still relies on the PC industry for about 55 percent of its revenue, according to Nomura Equity Research analyst Rick Sherlund.
"The launch of Windows 8 should provide a few years of robust growth and opportunity for Microsoft to reposition itself to better defend its position against challengers," Sherlund wrote in a note after Microsoft reported the latest erosion in its Windows division.
Besides spurring more sales of the new operating system, Windows 8 is likely to drive demand for the next generation of the Office suite, another major moneymaker for Microsoft. In the demonstration in Barcelona, Office looked just like it normally does -- but can be opened with a finger swipe.
Windows 8 could inspire more PC makers to design machines that combine the convenience of tablets with the utility of a notebook computer. These devices would be similar to the so-called "ultrabook" computers that offer a Windows-based version of Apple's lightweight MacBook Air machines.
Once Windows 8 is available, the ultrabook line could be expanded to include machines equipped with a screen that swivels off the keyboard to take advantage of the system's touch controls and provide a tablet-like experience.
Liedtke reported from San Francisco.
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