Microsoft on Thursday officially launched the latest version of its flagship operating system, kicking off a $250 million marketing campaign for what is a crucial launch not only for the software giant but for the whole embattled PC industry.

The widely anticipated operating system, Windows XP, which has been pre-installed on new personal computers for many weeks now, is available as a separate product in shops as of Thursday. It sells for $199 for the full version and $99 for the upgrade. 

The key idea is to get consumers more connected — with better Internet tools and features including built-in wireless networking support. The XP is has also been touted as practically crash-proof.

Microsoft used its $36.2 billion cash pile to throw launch parties around the globe, schmoozing thousands of customers and business partners and making sure its biggest names hit the streets plugging the product. 

Microsoft's Chief Executive Steve Ballmer spearheaded an event in London, while co-founder and Chief Software Architect Bill Gates in New York was scheduled to host the biggest corporate bash since the September 11 attacks on the United States.

The choice of New York is deeply symbolic — after the Sept. 11 terrorist attacks, Microsoft considered pushing the product launch back. But a telephone conversation between New York Mayor Rudolph Giuliani and Gates persuaded the software giant to go ahead with business as usual.

Industry analysts agree that XP is a crucial product not only for Microsoft but for the whole PC industry, which is going through a record slump in sales.

"Microsoft isn't the only one counting on Windows XP for a burst in revenue," said Michael Silver, from research group Gartner, in his analysis of XP. "Original equipment manufacturers, hardware vendors and Intel hope that Windows XP will drive people to the stores to buy new PCs."

A massive ad campaign has already been launched on TV, in magazines, newspapers, and on taxicabs and buses — keyed to a Madonna song and the slogan: "Yes you can."

To further whet users' appetites, 11 million auto-demonstration CDs offering a sampling of Windows XP will be mailed out with magazines and handed out by Microsoft's business partners.

Comparisons with the launch of Windows 95 six years ago will inevitably be made, although no expert believes the new operating system will generate a comparable level of excitement. Microsoft is insisting that Windows XP will build its customer base over months and years rather than weeks as in releases past.

A number of analysts remain skeptical of XP's ability to save the industry. The chief analyst at the research firm Gartner warned that XP would not change the underlying weaknesses that have caused PC sales to be poor for a year now. "Gartner doesn't believe that many enterprises will upgrade Windows 2000 clients to Windows XP. We recommend against it," the firm wrote in a recent report.

Even if sales of Windows XP are brisk, the company still has plenty of other worries, including its own prediction that PC sales will be flat, or perhaps even decrease by 2 percent, over the company's fiscal year ending in June.

Meanwhile, the Internet has been abuzz with sometimes-acrimonious discussions on the advantages and shortcomings of the new system. The court of public opinion, particularly among some of Microsoft's potential customers, is well on its way towards reaching a verdict on XP. And their conclusions are not entirely flattering.

Chat rooms and message boards are brimming with questions, concerns and praise alike for an operating system that Microsoft promises will demystify personal computing.

Over 700,000 postings have already been submitted on a variety of discussion groups accessed on Google.com. On alt.os.windows-xp, over 10,500 messages have appeared over the past few days and weeks alone.

Several consumer groups also worry about allegedly illegal privacy gaps in the new operating system. A key feature of Windows XP, the Passport, allows users to automatically transfer personal and financial information about themselves to Web sites. This, consumer groups argue, could lead to serious privacy breaches. Groups such as the Electronic Privacy Information Center are asking regulators to require the system to allow more consumer opt-in procedures for sharing of personal data.

Reuters and The Associated Press contributed to this report.