The 'most reputable company in the US', as Microsoft was dubbed by analyst firm Harris Interactive back in February, had its share of ups and downs in 2007.

The company kicked off the year with one of its favourite hobbies: the launch of a new operating system and office software.

Windows Vista and Office 2007 were officially unveiled to consumers at a company event in New York. The software was available in 17 languages across 70 countries from 30 January.

Reports from the first week of sales for Vista suggested that the outlook for PC distributors was good, at least in the short term.

Research firm Current Analysis said that Vista's release caused a jump of 173 per cent in PC sales for the week ending 3 February, with Vista-equipped PCs accounting for 92 per cent of those sales.

The new operating system wasn't without competitors, though. According to industry analyst Forrester Research, Vista's main source of competition was from the company's own existing software, Windows XP.

Following the news that Windows XP was still selling well, it's no wonder the software giant decided to extend its lifespan.

Microsoft confirmed that it would add another five months to XP's availability, making it available to original equipment manufacturers and retail stores until 30 June 2008.

Dixons Stores Group probably wished it had a crystal ball when it came to XP and Vista sales. The company blamed poor sales of Vista-loaded laptops for a £20m slump in its UK profits.

Even Service Pack 1 got a rough ride when it arrived later in the year. Researchers from the EXO Performance Network claimed that its benchmark tests showed that users hoping to receive a speed boost from the update would be disappointed.

With Vista out of the starting blocks in 2007, it was also time for Microsoft to add to its software portfolio.

However, the launch of Microsoft's OneCare security software was initially marred by a number of test failures. It finally passed Virus Bulletin's coveted VB100 computer security test in June.

In the latest test results in December, OneCare even managed to hold onto that record, when other big names such as Sophos, Trend Micro and Kaspersky failed to protect against a collection of outdated viruses.