(Reuters) - Microsoft said on Tuesday its new Windows 7 operating system will be generally available on October 22, well ahead of its original schedule and in time for the holiday shopping season.

The new operating system, which will replace the unpopular Vista, was originally planned for roll-out at the beginning of next year, but Microsoft confirmed last month that it would hit the market in time for the year's busiest buying period.

The arrival of the new system is a big event for the computing world, as more than 90 percent of the world's PC's run on Windows, and strategically important for Microsoft, which gets more than half of its profit from its operating system unit.

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The latest release is crucial to win back public confidence after the disappointing launch of Vista in 2007. Vista was incompatible with some low-power machines and perceived by many to be too complicated.

The world's largest software company also faces new threats to its dominance in operating systems, especially in the fast-growing "netbook" market for small, portable PCs ideal for surfing the Internet and sending e-mail.

Earlier on Tuesday, netbook pioneer Acer Inc said it plans to sell small PCs that run on Google Inc's new Android operating system, making it the first manufacturer to do so.

Microsoft said it will send Windows 7 code to PC makers to load onto new machines -- known in the industry as "release to manufacturing" -- around the end of July.

By October 22, people will be able to buy new computers with Windows 7 installed, or pick up the software off the shelf to install on their old computers.

Microsoft confirmed that it will run a program whereby people who buy PCs with certain versions of Vista before October 22 can get a free upgrade to Windows 7, but it has not yet released details.

Microsoft shares were up 7 cents at $21.47 on Nasdaq.

(Reporting by Bill Rigby, editing by Gerald E. McCormick)