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Steve Ballmer's been giving out mixed messages on the likely impact of Windows 7 on Microsoft and PC sales.

With just over two weeks to go before Windows 7 is officially released, Microsoft's chief executive has reportedly played down the operating system's expected fillip on PC sales.

"There will be a surge of PCs but it will probably not be huge," Reuters reported Ballmer saying in answer to a question about the likely effect on the market of the new system.

Flipping back into super-sales-man mode, though, Ballmer apparently told SkyNews Windows 7 would pull Microsoft out of "the worst period of its history". He also told The Times: "With Windows 7 we're doing a great job! I think the product is pretty fine!"

Microsoft reported its first ever year-on-year quarterly revenue decline during its last fiscal year, thanks to the drop in PC sales. And then it happened again. The company has been forced to make its first layoffs to control costs, as a result.

As such, Ballmer blamed the recession rather than Microsoft's business model for plunging the company into the worst period he'd known while being with Microsoft. Ballmer joined in 1980.

Microsoft has been careful about saying when it expects the recession to end, but has broadly hinted at a return to spending during 2010.

Ballmer was giving out contradictory signals during his annual grand tour of the UK and European national and broadcast media outlets, organized by Microsoft's corporate PR team on the mothership in Redmond, Washington.

The UK and European press couldn't quite get with the program on this tour, either. According to The Times, which mixed a color profile with a Microsoft competitive talking points 101 from chief operating officer Kevin Turner, it was a case of the bombastic - Steve Ballmer: the future belongs to Microsoft. SkyNews and Reuters were less confident, with Microsoft Pins Revival Hopes On Windows 7 from Sky and Microsoft's Ballmer sees Windows 7 effect on PC market muted from Reuters.

The tour is designed to put Ballmer in front of serious-minded business press writing serious pieces rather than trade hacks that might try to embarrass him with questions about, er, losses, job cuts, and the impact of the recession on sales of Microsoft's days-away client operating system.

Among other highlights fielded by Ballmer during his outing: he is confident Bing.com would, over time, prove a challenger to Google. Well, he is the one who's committed $100m on marketing and several billion dollars on R&D to build Bing, after Microsoft ignored Google for 10 years on his watch, so he's kind of got a lot invested in the new search engine, both personally and professionally.

Oh, and you won't be surprised to learn Ballmer's rather glad the whole acquisition of Yahoo! didn't happen. "'With hindsight, Mr Ballmer admitted it was 'the worst mistake he never made'," SkyNews reported. "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.'" ®

Update: This story has been updated to clarify that Microsoft reported its first ever year-on-year quarterly revenue decline during its last fiscal year.

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