Microsoft is set to launch a Windows Phone 7 operating system with links to Xbox Live and Zune.
The online company hopes to launch the new system alongside a range of phones later this year in a bid to rival fellow operating systems such as Android and Apple.
HTC Corporation, a Taiwan-based smartphone manufacturer, which has worked with Microsoft’s software before, has already committed to creating devices using the new Windows Phone 7 system, according to reports.
Microsoft hopes the new system will put it back in the smartphone market after its share dropped from 8% to 2% last year, according to figures from AdMob.
Windows Phone 7 has been designed around six hubs – people, pictures, marketplace, music & video, gaming and office.
Steve Ballmer, Microsoft’s CEO, said: “There’s no doubt the phone market is highly competitive, dynamic and super exciting. We needed to do things that were out of the box, different from our past and from others in the market.”
The operating system is expected to be integrated with Microsoft’s search engine Bing as well as with the company’s gaming service and media player.