To use the JAVA_HOME environment variable you first need to download and install the Java Platform (JDK) from:
http://java.sun.com/javase/downloads/index.jsp

1. Right click on My Computer
2. Choose Properties
3. Click on the Advanced tab
4. Inside the advanced tab, click on Environment Variables
5. Click on New.. by the System variables

Variable name: JAVA_HOME
Variable value: “path to the java jdk folder”

6. Click Ok and Apply the new settings.