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Microsoft is reportedly considering offering Windows 7 on a USB thumb drive to allow netbook owners to upgrade their machines more easily.

Most netbooks lack a CD or DVD drive and an additional DVD player can cost up to $100.

Windows 7’s predecessor, Windows Vista, proved ill-suited to netbooks, forcing Microsoft to continue selling the older Windows XP.

The preponderance of XP on netbooks now complicates matters further for Microsoft, not to mention the users. Those moving from Windows XP can buy an upgrade, but must back up their data, do a clean installation of the operating system and then reload their applications.

Lenovo is also offering free Windows 7 upgrades to customers who buy a Windows Vista PC, following a similar deal from Hewlett-Packard.

Lenovo said that  it will mail a free Windows 7 license upgrade to people who buy a desktop or laptop with an eligible Vista version between June 26, 2009, and January 31, 2010.

Lenovo customers who buy a Vista Home Premium PC will be entitled to Windows 7 Home Premium. A Vista Business PC can be upgraded to Windows 7 Professional and a Vista Ultimate PC to Windows 7 Ultimate.

HP announced a similar upgrade offer on Thursday. Other major computer makers will likely launch similar offers. In offering the free upgrades, computer makers are working with Microsoft, which launched an upgrade option program for Vista buyers on Friday.

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