LAS VEGAS -(Dow Jones)- While Microsoft Corp. (MSFT) wants to expand beyond business customers, it remains to be seen if the mix of improvements to its Windows Mobile operating system will be able to get the job done.

The Redmond, Wash., software giant has pushed hard to get its foot in the mobile door through its operating system, and now wants to bust it open. At the CTIA Wireless trade show on Wednesday, it unveiled the latest version of its operating system, which features tweaks to improve the user interface and better appeal to consumers. Some critics, however, said the improvements won't be sufficient to truly reach out to the mass market.

"Windows Mobile has been quite successful at meeting the needs of the enterprise user," said Avi Greengart, an analyst at market research firm Current Analysis. "That said, I eagerly await a complete overhaul of the user interface."

Microsoft has made strides in getting its software into smartphones. The company boasts that Windows Mobile will power 20 million smartphones. That trails only privately held Symbian Ltd., which runs most of Nokia Corp.'s (NOK) handsets, which also includes simpler phones.

As a result, it's better known in corporate circles. But the company wants to reach out to more consumers. The shift comes at a time when more consumers are considering upgrading their basic handsets.

"Windows Mobile is not just for business phones," said Robert Bach, head of the entertainment and devices unit of Microsoft, in an interview with Dow Jones Newswires. "It's a phone for people."

Windows Mobile has been regarded as a solid tool for professionals, but never really appealed to casual consumers. The Apple Inc. (AAPL) iPhone's user interface and Safari Web browser, for example, are seen as offering a better experience.

Microsoft's newest version, Windows Mobile 6.1, allows users to more easily surf full Web pages on the cellphone than they could in the past. The company also upgraded the user interface so things are easier to reach and set-up. The new version will be made available to phone manufacturers in the third quarter, with devices hitting the market by the end of the year.

Many of the different upgraded features are found in other phones, Back said, but he argued the innovation comes from the combination of the multiple changes into one package.

There are no new game-changers in the latest update, but changes are definitely needed, according to Maribel Lopez, founder and analyst at telecom consultancy firm Lopez Research.

The upgraded operating system is the latest move that Microsoft has made to go after the consumer market. In February, the company agreed to acquire privately held Danger Inc., which makes software for the Sidekick mobile text devices. In November, it acquired Musiwave SA, which provides mobile music services to carriers and media companies.

If Microsoft Corp. can successfully pull off its announced acquisition of Yahoo Inc. (YHOO), it could gain a major edge in the mobile arena. Yahoo has been making a similarly strong push with its Yahoo Go mobile Web browser.

Bach declined to comment on the progress of any potential deal.

"I haven't spent much time looking at it," he said about the potential to fold Yahoo's mobile business into Microsoft. "We'll wait and see how they come out."

On the enterprise side, Microsoft said it would make available its System Center Mobile Device Manager, which allows corporate IT managers to better run the smartphones on their internal company systems.

The service also includes better security and allows the smartphones to create a virtual private network connection to the corporate system.

Microsoft, however, faces stiff competition from Research in Motion Ltd. ( RIMM). A legion of corporate workers still rely on their Blackberry email devices, and the company has a lock on much of the enterprise market. Apple, meanwhile, recently unveiled a set of enterprise programs in an attempt to get into the segment.

Bach noted phones with Windows Mobile were comfortably ahead of the iPhone and Blackberry devices.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

  (END) Dow Jones Newswires
  04-01-08 1816ET
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