Microsoft boss Steve Ballmer said Windows 7, which launches at the end of the month, will succeed where its unpopular predecessor Vista failed.

Although nine out of ten computers run some form of Windows, the world's largest software maker has been bruised by the global downturn. Profits at Microsoft fell by almost a third in the quarter between April and June. The company also announced that revenues fell for the first time in its 34-year history.

The chief executive admitted it had been the worst period he had known at the company but attributed the problems to the recession, rather than a bad business model. And he insisted the launch of the new operating system would revive Microsoft's fortunes.

"Eight million copies (of Windows 7) are out on beta tests, and people love it," he told SkyNews. "We have 50,000 people hosting parties for their friends to celebrate the launch of Windows 7."

Mr Ballmer said he was confident the company's new search engine Bing.com would, over time, prove a challenger to Google, which currently accounts for 90 percent of all searches.

"Fifty percent of the time people don't find what they are looking for on a search," he added. "There's so much opportunity there to innovate and to make a difference."

Mr Ballmer said he was very excited about Microsoft's partnership with Yahoo, a tie-up which is still in the process of being finalized. Microsoft offered $47bn to buy Yahoo a year ago, a bid that was turned down.

With hindsight, Mr Ballmer admitted it was "the worst mistake he never made."

He added: "Wow, I am glad we didn't do it, not because Yahoo wouldn't have been a good buy but because immediately afterwards the stock market collapsed."