The number one software maker is no stranger to smartphones and is counting on more than 7 million Windows developers to create new market opportunities especially to counter smartphones by Nokia (Quote, Company Info), Kyocera and other devices running the Symbian operating system.

According to statistics published earlier this year, 60 percent of smartphones are running Symbian OS, but London-based ARC Group expects this share to fall to 39 percent by 2007. Palm OS accounts for 22 percent of the market, falling to under 5.5 percent in 2007 as Microsoft OS gains momentum and rises from its current 6.6 percent share.

Overall, the analyst firm says global shipments are on track to grow from less than 1 percent of total mobile handsets in 2002 (3.5 million units) to 5 percent in 2007 (45 million units).

When Microsoft jumped into the smartphone game it was in Europe with the help of French-owned Orange. At the time analysts said it would only be a mater of time before it found partners for its foray into the Americas.

Many critics believed that partnership would include Intel (Quote, Company Info) and Deutche Telekom's (Quote, Company Info) T-Mobile considering the amount of noise that was made at the 3GSM World Congress in Cannes, France in February.

But three months later, T-Mobile said it would postpone the planned launch of its new handset citing quality concerns. T-Mobile said its smartphone will be manufactured by Taiwan's High Tech Computer (HTC), which also made the Orange SPV in conjunction with Microsoft.

Motorola also has its smartphone irons in a few fires. In addition to being a major backer of the Symbian partnership, the Schaumburg, Ill.-based wireless giant cut a deal back in March with MontaVista Software to build a Linux/Java-based smartphone.