With the 2005 holiday season just over, Microsoft is already coaxing consumers to put its new operating system at the top of their holiday shopping lists for 2006.

At his keynote speech during last week’s Consumer Electronics Show (CES) in Las Vegas, Microsoft chairman Bill Gates showcased the much ballyhooed, long-delayed Vista operating system, which is finally set to come out late this year. The presentation (which featured a walk-on cameo by pop singer Justin Timberlake) highlighted graphical advances in Vista that would, for example, allow consumers to organize and share digital photos more easily and view pictures alongside video on their PC screens.

Vista is still technically a work in progress – the Redmond, WA company released its third and most recent “community technology preview” build in late December. As Mary Jo Foley, editor of New York-based Microsoft Watch, points out, “we don’t know totally what’s in it.” But experts have seen enough to say that, alongside graphical presentation, new security and search capabilities will be the software’s main selling points. “If I were [Microsoft] and I were trying to attract people, I’d focus on the security,” Foley says.

Based on what Microsoft has revealed – in a beta release last fall, its community previews, and the CES presentation – better security is definitely a core component, and could be key to drawing in virus-weary consumers. Vista will incorporate anti-spyware and anti-virus protections into the system, Foley says, and ferret out any unusual activity in the file system, registry, or network that could be a sign of malicious. As a safeguard for consumers who are routinely plugging in memory sticks, handheld organizers, and other mobile gear into their computers, the OS will also securely “check in” new devices as they are connected to the PC, and prevent a user from connecting to potentially compromised machines in a wireless network environment.

Michael Cherry, a lead analyst with Directions on Microsoft in Kirkland, WA, believes Vista’s so-called “user account protection” will be another critical aspect of of its security system. This feature allows each user only as much access to software applications or the operating system as they will need to perform specific tasks. Cherry says this will substantially limit hackers’ ability to “do a drive-by install of spyware.”

Microsoft has also been trumpeting the operating system’s new search and navigation capabilities. Mike Burk, a product manager with the Windows client division at Microsoft, says that the new OS will make searching a local hard drive easier, and will also collect data from other locations and devices connected to the PC. And through the Windows feature code-named Flip, users can page across a series of live “thumbnails” of open applications and documents to find what they need. A related feature called Flip 3D utilizes the system’s improved graphical presentation and search together, so users can scroll through a three-dimensional stack of all their open windows – “similar to using a Rolodex,” Burk says.

Vista users will also be able to create “virtual folders” that can contain all the documents and applications related to a particular project or query, or even a time period, says analyst Cherry, so they’re easier to access.

To meet its release schedule, Microsoft has had to cut certain features from Vista – notably, the new WinFS file system, which was to have stored data from multiple Windows programs in a single common database, simplifying searches. That will have to wait until the server version of Vista comes out in 2007. But while Vista may lack a lot of “sexy” features at first, says editor Foley, “there’s a ton of really good stuff.”

Many of the major changes in Vista have to do with infrastructure features that most people don’t use directly. “A lot of this low-level functionality doesn’t mean a lot to the average person,” says Cherry. But once Microsoft releases Vista programming tools to software developers, they’ll find ways to exploit the new infrastructure by building more compelling applications, he believes.

One advantage that Cherry thinks Vista will probably have is a relative lack of bugs and security holes. Given the company’s spotty, albeit improving record in patching security holes, he believes that Microsoft executives are choosing to focus on a less feature-rich, more stable version of their core product. “Microsoft can no longer afford a buggy release,” Cherry says; “they almost lost market share over their security problems” with Windows XP before releasing Security Pack 2. “I don’t think they’ll risk shipping a bad product.”

But while Vista is expected to be more stable than previous Windows operating systems, it’s also sure to be much bigger. Although Microsoft will not release the minimum system hardware specifications needed to run Vista until the summer, according to Microsoft’s Burk, the operating system will require at least 512 megabytes of RAM, a dedicated graphics card that supports Microsoft’s with DirectX 9.0 graphics standard, a minimum of 64MB of virtual RAM, and a “modern” Intel Pentium or AMD Athlon processor.

Vista will also require at least 3.5 gigabytes of free disk space, according to predictions from users of beta releases. These hefty system requirements may limit the use of Vista to consumers with the newest PCs, some experts believe. “The features all look really good on super high-end machines,” Foley says, “but I’m a little skeptical about running Vista on older hardware.”

Although Cherry doesn’t believe the disk space requirements will prove to be a major hurdle for most consumers, he thinks Vista’s need for an advanced graphics card with its own processor and memory management might be a stretch for laptop users – whose machines are already straining against overheating and limitations on battery life. “And more and more people are using laptops” rather than desktop machines as their primary PCs, he points out.

Consumers without a burning urge to buy a new PC loaded with Vista, Cherry says, would be well-served to continue using Windows XP operating system with Service Pack 2 for the next couple of years. For one thing, he points out, applications designed specifically for Vista will take time to emerge – so the current operating systems will not be outmoded anytime soon.