Microsoft (NASDAQ MSFT) continues to play catch up with Apple. (NASDAQ AAPL) While its Windows Vista program can best be described as a bust, they are now rushing Windows 7 to market as quickly as possible.

In fact, the number of people “downgrading” to Windows XP continues to grow. (This user, among them.) The Vista system, with its highly touted bells and whistles was marketed as an answer to the Apple operating system. Complete with snazzy graphics, ease of use, and intuitiveness, Vista never lived up to its claims.

With the release date for Windows 7 moved up to August of 2009, Microsoft is hoping it can overcome the dismal sales of Vista. Microsoft has good reason to be wary of shipping Windows 7. Windows Vista, the company’s current OS, experienced a number of setbacks almost from the moment it debuted in January 2007. Among its many problems were: incompatible applications and device drivers, user complaints about Vista’s hefty hardware requirements, and intrusive security measures that sought manual approval for even the most routine tasks.

In an effort to make Vista more user friendly, Microsoft created a giga-byte monster that confused and angered the user.

Over in Cupertino, California, Microsoft’s rival- Apple, wasted no time in lampooning Vista’s foibles through a series of commercials, featuring the cool Mac guy and nerdy PC guy, that became instant classics in the ad and tech industries. Dissatisfaction with Vista also caused most major enterprises to shun the OS and hang onto predecessor Windows XP well past its intended shelf life.

As a result of these issues, Microsoft saw Windows sales fall 16% in the most recent quarter. Now, they are praying that Windows 7’s will receive early favorable reviews. They also hope that new features such as built-in touch screen support, will help it overcome the Vista debacle.

On a related front, Microsoft is readying itself to challenge Apple’s iPod with a June release date of the Zune player. In its advertising, Microsoft claims that it can cost upwards of $30,000 to fill the iPod’s memory with downloaded music, substantially more than the low cost fare for the Zune.

In addition, many reviewers claim that the Zune software is much easier to use. Can the Zune overcome the substantial marketing campaign of Apple’s iPod? Only time will tell. But for now, it would appear that the market strategy for the Zune is dead on. Easier to use, with less expensive music, perhaps the Zune can lend its marketing expertise to its big brother the Microsoft operating system.

Is Microsoft ready to shed itself of its stodgy image or is it so caught up in its old way of doing things that it can’t change? Time will tell and that time may be rapidly approaching.