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Originally published February 17, 2009 at 12:00 AM | Page modified February 17, 2009 at 1:22 PM

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Microsoft unveils LG phone deal, updates software

Microsoft said Monday it had signed a multiyear agreement for Windows Mobile to be included on devices from LG Electronics and introduced updated phone software in a bid to catch up with Apple's popularity with consumers.

Bloomberg News

Microsoft said Monday it had signed a multiyear agreement for Windows Mobile to be included on devices from LG Electronics and introduced updated phone software in a bid to catch up with Apple's popularity with consumers.

LG, the third-biggest phone maker, will produce about 50 models that run Windows over the next five years, said Scott Rockfeld, a director in Redmond-based Microsoft's mobile business.

LG, based in Seoul, South Korea, will use the software as its primary program for smartphones, devices that can send e-mail and browse the Web.

Microsoft is also adding software with touch controls and a store that offers phone applications — features already available on Apple's iPhone.

While 46 percent more Windows phones were sold last year than iPhones, the iPhone is growing faster and has gained a cult following among consumers.

Microsoft also faces a threat from Android, a mobile operating system from Google.

"First they dismissed Apple, then they ignored them — they squandered a good year and a half letting them build up mindshare and a developer network," said Michael Gartenberg, an analyst at Interpret, a market-research firm in Los Angeles. "It's important for them to get the word out that Windows Mobile is viable and is evolving."

Microsoft Chief Executive Steve Ballmer unveiled the software — Windows Mobile 6.5 — Monday at the GSMA Mobile World Congress in Barcelona, Spain.

Phones with the program will be available later in the year, said Ballmer.

Microsoft will also offer a service that synchronizes address books, calendars, photos and text messages with users' computers.

"It is important for us that we have a strong presence and position on the phone," Ballmer said.

Apple, which released the iPhone in June 2007, has a similar program called MobileMe, which costs $99 a year.

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Microsoft's service is free and has more features, said Andy Lees, senior vice president of the company's mobile-communications business.

"We're innovating," he said. "Saying we aren't the company that's innovating is inaccurate. I don't see them providing the same things we have."

Microsoft, which has previously focused on Windows Mobile, has realized that it needs to put more effort into making additional software and services, said Lees, who took over the group last year. That would make it easier to do tasks like share photos, he said.

Microsoft's Windows operating system s powers more than 90 percent of all personal computers, according to the research firm Gartner.

But Microsoft trails its rivals in mobile software for smartphones.

Symbian, the operating system developed by a consortium led by Nokia, the world's top handset maker, leads with 52.4 percent and Research in Motion, the Canadian maker of the BlackBerry smartphone, is next with 16.5 percent, according to Canalys, a research firm in Reading, England.

At the end of 2008, Microsoft had 13.9 percent of the global mobile operating-system market.

The company hopes agreements with major handset makers like LG will help it regain its momentum in mobile software, which is among the fastest-growing segments of the global software industry.

"The mobile device is the computing device of the future," said Bengt Nordstrom, the founder and chief analyst of Northstream, a company in Stockholm, Sweden, that advises mobile operators and equipment makers.

"Mobile operating systems are the biggest battleground of the mobile industry," Nordstrom said.

Material from The New York Times and The Associated Press is included in this report.

Copyright © 2009 The Seattle Times Company

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