The beta release of Windows CE 6 features a redesigned operating system (OS) kernel architecture, expanded capacity for simultaneous processes and a newly integrated tool set.
Microsoft has brought to market an array of so-called "smart phones," the broad term for phones that can do things such as check e-mail and keep track of appointments.
In a major coup late last year, Microsoft struck a deal with Palm to launch a Windows-based version of the Treo smart phone, after years of battling against the traditionally dominant Palm operating system for handheld devices. The deal came after Palm had spun off its software division.
But now Microsoft is facing stiff competition from the popular BlackBerry, which has built a loyal following for checking e-mail on the go.
Microsoft also must battle an array of other companies, all seeking to add even more functions to mobile phones.
Microsoft believes it has an edge in that its system is similar to Windows for PCs, and that Windows Mobile has the potential to offer more functions than some of its rivals.