Microsoft is at the start of a two-year plan designed to give remote and telecommuting users the power of their desktop in handheld devices by more deeply integrating the company's mobile platform with collaboration software, online services and development tools.

The plan took a significant leap forward this month when Microsoft released Version 6.0 of its Windows CE operating system, which is the foundation ofthe Windows Mobile operating system and the launchpad for a more diverse selection of corporate mobile applications.

Microsoft currently has two versions of Windows Mobile on the drawing board, including a major version upgrade code-named Photon that incorporates CE 6.0 and is set to ship at the end of 2007 to OEMs and be available on phones and PDAs in the first half of 2008. Next month, Microsoft plans to ship to OEMs Crossbow, the code name for an upgrade to the current Windows Mobile 5.0 operating system, which is scheduled to be available on devices in the first half of 2007.

The company says Windows CE 6.0 architecture and performance upgrades will provide support for more advanced multimedia, Web services and wireless network tools.

That's the shot in the arm that Microsoft needs, experts say.

Currently, Windows Mobile runs on more than 100 phones from 47 devices makers, according to Microsoft. Some 115 service providers around the world provide users with devices that run Windows Mobile.

Mobile market challenge

But the mobile market has been a challenge for Microsoft, which has struggled to distinguish itself from competitors such as Nokia, Openwave Systems, Palm, Qualcomm, Research In Motion, and Symbian.

The struggle is encapsulated in the revenue numbers of Microsoft's Mobile and Embedded division. While revenue was up 44 percent between fiscal 2005 and 2006, only in 2006 has the division shown an operating profit, which was US$2 million. By comparison, the division lost $65 million in 2005 and $237 million in 2004.

Microsoft plans to keep moving forward on the back of its improved Mobile platforms anchored by CE, and via its hallmark knockout punch – integration with Visual Studio development tools in the hope of exciting application developers.

With 6.0, CE's Platform Builder application developer tools now plug into Visual Studio 2005's integrated development environment and give developers a single tool to create applications for many form factors.

The recipe calls for smart phones and PocketPCs, which run Windows Mobile, to become a staple of corporate life, which is where the challenge for Microsoft comes in.

"Microsoft is not getting huge wins in the enterprise," says Mike Disabato, vice president and service director for network and telecom strategies at the Burton Group. "They need those wins so they can point to them, but right now all they have are some minor applications that people are using but don't want to talk about."

More than just email

The main application Microsoft is using to stimulate growth is email, but there is more to the game.

"Our ambition here is to have Windows mobile devices attached to not just five to 10 million Exchange [e-mail] seats, which is the number today, but to expand that to hundreds of millions of users," Pieter Knook, senior vice president of the Windows Mobile and Embedded division, told developers at April's Mobile and Embedded DevCon conference. "Now we are in the heart of the battle for who is going to expand the market dramatically for mobile e-mail."

After e-mail, Microsoft is looking at its collaboration and business applications. The company already has mobile clients for its Dynamics CRM and Office Communicator instant messaging program along with Pocket versions of Word, Excel and PowerPoint.

With Crossbow, the company plans to expand the business productivity capabilities of the mobile platform by deeply integrating the myriad of collaborative functions in Exchange 2007 and Office 2007.

Today, the Messaging and Security Feature Pack, an add-on to Windows Mobile 5.0 that shipped in 2005, adds a real-time synchronization feature called Direct Push aimed at matching features from rivals such as Research in Motion's BlackBerry.

But with Office 2007 and its SharePoint Server, which is now the focal point of Microsoft's collaboration tools, the company plans to make mobile devices a key endpoint for the real-time platform.

"Integration will allow them to leverage the things they are good at outside the mobile world," says Ryan Reith, an analyst at IDC. "If they can follow in the lead of what they do for desktops and Windows Live into the mobile world, it will help them grow. Windows offers a comfort level of 'I know how to use it on the desktop and so it has to be the same on the device.' It breaks down barriers."

Desktop on the road and in your hand

Breaking those barriers includes other new applications, including a note-taking program called OneNote Mobile that will allow users to synch notes taken with the desktop version of Office OneNote with those taken on smart phones. Currently, the application does not support PocketPC.

"Windows Mobile is a great companion device for experiences primarily honed on the PC or the Web," Ray Ozzie, Microsoft's chief software architect, said during a speech to financial analysts in June. Ozzie, who is charged with developing Microsoft's strategy for delivering online services, said corporate mobile users also will see integration with the Windows Live menu of online services. "It's our aspiration to create seamless Web, desktop and mobile experiences for all activities relevant to users and customers in all our markets," he said.

That goal will be attacked with the successor platform to Crossbow, which is code-named Photon. The platform, expected to be available on devices in 2008, will be targeted at a broader audience of mobile information workers and feature a modular architecture, and a customizable user interface designed to make it easier to configure devices and software for target markets. Microsoft also will combine the separate software developers kits for smart phones and PDAs into a single SDK.

Through it all, Knook says Microsoft will continue to release feature packs targeted at improving operations on specific devices and the Mobile platform in general.

"Microsoft's challenge is to prove to people that switching to Windows Mobile is a good thing," says IDC's Reith.

With a two-year road map now in place, the clock is ticking on Microsoft.