In the third and final segment of our Windows 7 review, we look at installing and upgrading the operating system. For part 1 of the review see here, and for part 2 see here.

Installing Windows 7 is relatively painless and we found it takes about half an hour once you've supplied the installer with your language and country settings. After a reboot or two, you should find yourself looking at the clean, mostly empty, desktop of Windows 7 (see screenshot below).

In our tests, the first thing Windows 7 did after installation was ask whether we wanted to set up a HomeGroup network, and supplied a password for other Windows 7 PCs to use when joining the group. It then downloaded and applied any available updates.

System requirements
Windows 7 requires a PC with a minimum 1GHz processor and 1GB of memory (2GB for a 64-bit version), plus at least 16GB available disk space. These are similar to the requirements for Windows Vista, but PC hardware has moved on in the three years since Vista was released, and it is now virtually impossible to buy a new PC that does not comfortably exceed these requirements.

In addition, while Vista is sluggish on PCs with less than 2GB, Windows 7 appears to work fine with the 1GB minimum. In tests, we installed it onto a Toshiba netbook (see Installing Windows 7 on a netbook), which had no difficulty running the new operating system on its low-power Atom processor.

Those upgrading an existing PC to Windows 7 will have little to worry about if they are currently running Windows Vista. The same is not true if you are one of the many users still running Windows XP, however, as Microsoft does not offer a direct upgrade path from XP to Windows 7.

Users wishing to upgrade from XP will have to do a full, clean install of Windows 7, which will overwrite everything already on the hard disk. Windows Easy Transfer, a tool built into Windows 7 and available as a free download for XP from Microsoft's web site, enables users to export files and settings to external storage, then import them back again after the installation.

Alternatively, third-party tools such as Laplink's PCmover Windows 7 Upgrade Assistant go further, and claim to allow XP users to perform an in-place upgrade to Windows 7, keeping all applications and data intact.

Given the retail price of Windows 7, anyone running XP on a PC more than a couple of years old is probably best advised to wait and get the new platform when they trade up to a new system, rather than upgrading their existing one.

Application compatibility
Microsoft's position on application compatibility is that the majority of software developed for Vista should run fine, with the possible exception of low-level tools such as anti-virus software. But applications that were designed specifically for XP are generally so old now that compatibility cannot be guaranteed.

However, we found that many applications we regularly use on XP (such as Office 2003) work on Windows 7 without a hitch, but it is inevitable that there will be issues with some XP applications, especially turnkey business applications.

Microsoft offers a free tool called Windows 7 Upgrade Advisor, which can check a PC for compatibility issues and generate a report.

Windows XP Mode
For applications that require XP, Microsoft has an answer in the form of Windows XP Mode. This runs problem software inside an XP virtual machine specially configured so that all the user sees is the application window as usual (see the screenshot of an application running in XP Mode on a Windows 7 system below).

However, Windows XP Mode is supported only in the Professional, Enterprise and Ultimate editions of Windows 7, and even here it is a separate download and not supplied as part of the operating system.

XP Mode may also not prove an ideal solution, as it effectively means that two operating systems need to be managed for each client. It also requires higher system specifications.

Upgrade niggles aside, our overall opinion is that Windows 7 is the best release of Windows in a long time, and that users will have few regrets moving to the new platform, whether business or consumer customers.

Businesses are likely to have to plan for a migration to Windows 7, but such a process will be made easier if they have already deployed Windows Vista to a greater or lesser extent.

For consumers, Windows 7 is the successor to Windows XP that everyone has been waiting for, and we would recommend it when investing in a new PC.

The only fly in the ointment is the high cost of many of the editions of Windows 7, which look pricey compared with, for example, the £25 it costs Apple Mac users to upgrade to Snow Leopard, the new version of Mac OS X. Again, for this reason, we would advise users of XP or Vista to consider carefully whether to upgrade now or wait until they are ready to purchase a new PC.