Microsoft unveils Windows Phone Series 7

Microsoft Corp. unveiled a new operating system for mobile phones Monday, marking its latest move to reclaim a leading position against rivals Apple, Research in Motion and Google.

Just a few years ago, Microsoft (MSFT, Fortune 500) was embedded in about a quarter of all smartphones sold. It’s now in less than 10%, with competition coming from the iPhone and BlackBerry. Google (GOOG, Fortune 500)’s Android has only made a crowded space even tougher for Microsoft.

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Now, after months of speculation, Microsoft has confirmed that 7 will be a tiles based interface and include live access to Facebook, plus its own offerings X-Box Live for gaming and Zune for music and photos. Its search engine Bing is also included.

Microsoft says it looks like nothing on the market and the advantage lies with consumers gaining instant access to all these offerings on their smartphones.

Microsoft CEO Steve Ballmer told CNN that this is a major push for the company to get back in the mobile space. He said 7-based smart phones will be sold by the likes of Samsung, LG and HTC and will be available by Christmas this year on multiple mobile networks.

The software experience is designed to “fundamentally focus on what’s most important to each individual user,” said Joe Belfiore, Microsoft’s corporate vice president for Windows Phone Program Management, during a Web cast from Barcelona.

The operating system’s start screen is made up of several “live tiles” that are updated in real-time. So instead of seeing an icon for a Facebook application, Belfiore explained that users will be able to browse through their contacts and get live updates from their Facebook, Windows Live and other social media services in one hub, without moving in and out of various applications.

Users will be able to create live tiles on their start screens for contacts to get constant updates for certain individuals.

Though the iPhone has been outselling the Windows Mobile devices for two years, it recently beat Microsoft in terms of active smartphone users, according to data from comScore.

At the end of 2009, BlackBerry continued to hold the lead with 41.6%, followed by the iPhone with 25.3% and Microsoft came in third with 18% of the smartphone market share.

While Google (GOOG, Fortune 500)’s Android still ranks fifth behind the Palm, its market share climbed the most during the fourth quarter, rising to 5.2% from 2.5% in September.

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