Barcelona, Spain is abuzz with anticipation as Microsoft gears up to unveil the long-awaited Windows Mobile 7 operating system for smartphones at the Mobile World Congress. This move signifies Microsoft’s strategic effort to revamp its presence in the competitive smartphone market dominated by industry giants like Apple and Google.

During Microsoft’s press conference scheduled for Monday, the operating system will be showcased, offering a glimpse into its features and capabilities. Although specific details about Windows Mobile 7 are still scarce, reports suggest that its user interface may bear resemblances to the one utilized on Microsoft’s Zune HD music player.

Despite holding a significant portion of the global smartphone market share, Microsoft has experienced a decline in recent quarters as competitors such as Apple, Google, and Research In Motion have made substantial gains. Unlike rivals who design both hardware and software for their devices, Microsoft traditionally focuses on supplying software to various hardware manufacturers.

There is speculation within the industry about whether Microsoft will adopt a new approach with Windows Mobile 7 similar to Google’s collaboration with HTC on the Nexus One. While it’s unlikely that Microsoft will introduce a sole Windows Mobile 7 smartphone, indications point towards closer collaboration with handset manufacturers to ensure consistency and quality across Windows phones.

In line with this strategy, rumors have surfaced about an upcoming mobile device under development by Microsoft aimed at capturing the youth market segment following the T-Mobile Sidekick acquisition from Danger two years ago. Codenamed Pink and manufactured by Japan’s Sharp, this device is set to prioritize social networking features and is expected to launch internationally through Verizon Wireless and Vodafone Group in spring.

Microsoft’s press conference at Barcelona on Monday marks a pivotal moment in its endeavor to reshape its standing in the highly competitive smartphone landscape.