Microsoft has released a tool that lets netbook owners install Windows 7 on their machines using a USB flash drive, sidestepping the usual requirement of a DVD drive.

The utility, Windows 7 USB/DVD Download Tool, creates a bootable flash drive from a downloaded .iso file, or disk image, of Windows 7, and can be purchased from Microsoft's online store.

"This tool allows you to create a copy of the .iso file to a USB flash drive or a DVD," said Microsoft in the instructions accompanying the tool. "To install Windows 7 from your USB flash drive or DVD, all you need to do is insert the USB flash drive into your USB port or insert your DVD into your DVD drive and run Setup.exe from the root folder on the drive."

The USB/DVD Download Tool solves the problem facing netbooks users who want to upgrade to Windows 7, since virtually all netbooks lack a DVD drive. Earlier this year, rumors circulated that Microsoft might offer Windows 7 upgrades on a flash drive, but the talk turned out to be nothing but wishful thinking.

Users need a 4GB USB drive to install Windows 7 on a PC without an optical drive, Microsoft said. Other requirements include .NET Framework 2.0 or later, and the ability to run as administrator on the to-be-upgraded netbook.

The netbook's BIOS must also be modified to set the boot order so that the USB drive is first on the list. "Please see the documentation for your computer for information on how to change the BIOS boot order of drives," Microsoft recommended.

Last Thursday, Microsoft warned users to seek help if they were unfamiliar with tweaking the BIOS. "If you are not comfortable making this type of BIOS change, I recommend you seek some assistance from your favorite 'tech geek,'" Microsoft spokesman Brandon LeBlanc urged in an entry to the Windows 7 blog .

Because most netbooks run Windows XP, only a "clean" upgrade to Windows -- Microsoft dubs it "Custom" during the installation -- is possible. That requires users to back up data and application settings before upgrading, then restore the data and settings, as well as reinstall all applications. (This Computerworld FAQ outlines the steps to take before beginning the Windows 7 upgrade from XP.)