UPDATE 1-Looking out past Vista, Windows 7 aims to simplify

(Adds details on Windows 7 development, analyst comment)

By Daisuke Wakabayashi

LOS ANGELES, Oct 28 (Reuters) - Microsoft Corp (MSFT.O) is betting its next Windows operating system will be faster and easier to use and avoid the missteps of Windows Vista that alienated many users of the software that powers 90 percent of the world's PCs.

Windows 7, which was previewed on Tuesday, is set to be introduced in a test version early next year with features including touch screen technology and the ability to more easily personalize the system.

Windows Vista was so heavily criticized due to poor compatibility with devices and slow start speeds that it became the target of an effective marketing campaign by rival Apple Inc (AAPL.O).

In addition, the usefulness of a traditional Windows desktop operating system, the world's largest software maker's most profitable product, is being challenged as more software applications move online, highlighting the central role of Internet browsers in a world centered on the Web.

Microsoft decided to measure success by a positive user experience versus technical superiority -- often overlooked by ordinary consumers.

Julie Larson-Green, a Microsoft corporate vice president in charge of overseeing the design of Windows 7, said: "It's fine to have the best technical solution. But just like VHS and Beta (Betamax), the best technical solution doesn't always matter," referring to the video format battles in the late 1970s and early 1980s.

The company also adopted a 'simple is better' philosophy, looking to remove complexity from an operating system that incorporated 50 million lines of programming code in Vista.

"The general perception is that Vista is a damaged brand, so it behooves Microsoft to move on to sell something new even if it's not a quantum leap in terms of technology," said Toan Tran, analyst at Morningstar.

SUCCESS DEFINED BY USERS

Microsoft plans to introduce more user-friendly features, such as a new taskbar that previews all the open windows from a single application by hovering over the program's icon.

Another new feature is called "Jump Lists," which provides updated lists of recently worked-on documents or often visited Web sites without first having to open Microsoft Word or an Internet browser.

"People aren't coming to Windows to use Windows. People are coming to Windows to get to what they want to do. Helping them get to what they want to do is the goal of the operating system," said Larson-Green.

Larson-Green came over from the Office group with Steven Sinofsky, who took over Windows development with a reputation as a disciplined task master with a focus on simplifying the user interface.

To keep the team focused, every Windows 7 engineer was handed a pamphlet of core principles with Zen-like slogans such as "reduce concepts, increase confidence," and "small bad and good things matter."