Microsoft, as expected, unveiled a new version of its operating system for mobile devices that it says offers increased reliability, improved hardware support and a host of new features to both entertain users and make them more productive.

PDAs (personal digital assistants) and smart phones running the new Windows Mobile 5.0, previously code-named Magneto, are scheduled to come to market over the next couple of months. Enhancements include support for hard disks, additional wireless network types and persistent storage to retain user data when the battery is depleted.

Devices running Microsoft's operating systems rival products with the Symbian operating system from handset makers, including Finland's Nokia, and Palm OS-based products such as PalmOne's popular Treo 650.

"The whole mobile space is incredibly hot," said Bill Gates, Microsoft's chairman and chief software architect, in a keynote speech announcing the new software at the company's annual mobile and embedded devices conference in Las Vegas. "We're moving well beyond just doing voice calls and SMS messages," he said.

Windows Mobile 5.0 offers hardware makers more flexibility and mobile operators more ways to customize devices, allowing for a wider range of devices, according to Microsoft. For example, the operating system supports more buttons, landscape display and QWERTY keyboards that will let users control the device in one hand.

Additions in network support include support for more high-speed networks, the addition of wireless LAN in Windows Mobile for Smartphones and support for push-to-talk, Microsoft said.

For entertainment, Microsoft announced Windows Media Player 10 Mobile. The media player software supports Microsoft's digital rights management technologies, which lets users play music bought in online stores and view TV shows recorded on Media Center PCs on their mobile devices.

For work, Microsoft has updated the mobile versions of Excel and Word and announced a mobile version of PowerPoint. Another feature that may appeal to enterprise users is for support encryption over a VPN (virtual private network) connection. Other security features in Windows Mobile 5.0 include Bluetooth authorization, Microsoft said.

Gates reveled in the success of Windows Mobile in the past year. In late 2002, Orange SA was the first mobile phone operator to sell a Microsoft-based smart phone. Today 68 operators in 48 countries sell devices made by 40 manufacturers, Gates said. "Over the last couple of quarters we had over a million devices shipped in Europe alone," he said.