Microsoft has been outlining its plans for servers and netbooks at the Computex show in Taiwan.

Steve Guggenheimer, Microsoft’s OEM division corporate vice president, told attendees that the company will release Windows 7 in October, and Windows Server 2008 R2 at "broadly" the same time.

Microsoft is preparing the two operating systems to be ready for two smaller markets, namely entry-level servers and netbooks.

On the server front, Guggenheimer said that OEMs such as Acer, Dell, Fujitsu, HP, Lenovo, IBM and NEC have signed up to build smaller servers running Windows Server 2008 Foundation.

The software is designed for single-processor servers used by around 15 clients, and lacks key Linux features like support for virtualisation. The code is aimed at small companies that are currently using consumer PCs for business, and want to make the jump to their first server.

"We expect this new server platform to be popular in markets across the globe, with its modest cost making it possible for small companies to grow, innovate and stay competitive, which in turn can ignite growth for their local economies," said Guggenheimer.

In the netbooks market, Guggenheimer said that the platform had rapidly evolved from internet viewing device to powerful miniature PC. As such, the term 'netbook' is being replaced by 'small notebook PC' at Microsoft.

"A year ago, when these smaller PCs first came onto the scene, many in the space were saying that consumers wouldn't want or need these devices to be full-featured," he said. "In fact, the exact opposite turned out to be true. Consumers really do want small notebook PCs to work like their laptops and desktops."

Windows 7 will be available for netbooks in its fullest feature mode, but Microsoft also wants to see the operating system on new breeds of electronic device.

"This next generation of smart, connected, service-oriented devices will give people mobile access to a rich set of media and information," said Guggenheimer.

"Using Microsoft technologies like Windows Embedded CE, Visual Studio, Silverlight and Expression Blend, we can enable devices such as personal navigation devices, portable media players, set-top boxes and networked TVs to provide a rich browsing experience and a dynamic, immersive user interface."