Microsoft is preparing for a head-to-head battle with Google in a fast-growing part of the laptop software market, in a confrontation that marks the most direct encroachment yet by the internet company into Microsoft’s core operating system business.

Steve Ballmer, chief executive of Microsoft, on Tuesday pointed to the coming conflict when he said Microsoft was preparing a slimmed-down version of the forthcoming Windows 7 operating system to work on so-called netbooks, or mini laptop computers.