Microsoft will reportedly showcase its Windows Mobile 7 operating system as well as a new phone phone line (Zune phone?) that will run Windows Mobile 7, at the Mobile World Congress Event in Barcelona next month. Microsoft is planning to finalize the code for Windows Mobile 7 by summer in order to have the new software on devices that ship before the end of the year, according to a CNET report.

Microsoft is also working on a new consumer phone line designed to be the next generation of the Sidekick product line that Microsoft inherited with its 2008 acquisition of Danger, the maker of the T-Mobile Sidekick. It is no tclear whether the new device will be the so-called and heavily rumoured "Zune Phone." However, CNET reports that the device will be based on Windows Mobile 7 and likely to be able to connect to Zune and other consumer services that Microsoft has been developing for some time now.

Microsoft has been working for years now on plans to revitalize its phone business after ceding ground to Apple, Research In Motion, and lately Google with the Android OS.

Windows Mobile 7 was supposed to be in phone makers' hands by early 2009 but has suffered a number of delays.

Microsoft has not officially commented on Windows Mobile 7 or the new consumer device. Microsoft CEO Steve Ballmer has said: "The development of own-brand mobile phones is not our strategy, our strategy is to develop software." However, Robbie Bach, the head of the company's entertainment division, told CNET in an interview at January's Consumer Electronics Show that Microsoft would have a lot more to say about the future of the phone business in Barcelona. Microsoft has also promised developers headed to the Mix 10 trade show in March that they will be able to get information on how to program for Windows Mobile 7.