The first smartphone based on the new "Mango" edition of Microsoft's Windows Phone platform was unveiled on Wednesday in Tokyo, PCWorld reported.
The debut of the Mango phone is Microsoft's latest attempt to return to the smartphone market as a serious player. Several other handsets will come out in the next few months.
Microsoft's share of the smartphone market was 2.7 percent during Q1 of 2011, according to IDC. But just a year earlier, the market share was 7.1 percent. Also, the shipping of Windows Phone 7 or Windows Mobile dropped to 2.8 million from 3.9 million at the same time.
"We've gone from very small to....very small," said Microsoft CEO Steve Ballmer earlier this month on his company's lackluster performance.
The Mango Phone, officially Windows Phone 7.5, adds about 500 improvements to the Window Phone 7 platform, according to Microsoft. It features an email conversation view, a threads function that brings together text, instant messages and Facebook chat, and Internet Explorer 9 for faster web browsing.
"Mango is a substantial improvement bringing multi-tasking and other needed features," Al Hilwa, an anyalyst with IDC, told PCWorld in an email. "This really begins to close the gap and in a couple of ways exceeds its competitors."
So far Fujitsu Toshiba Mobile Communications is one of several companies that Microsoft is working with on Mango handsets. Others include Taiwan's Acer and China's ZTE, and also Nokia.
Nokia is losing market share too, but it remains one of the worlds largest manufacturers of smart phones, so it has the potential to help Microsoft shift the market, according to the PCWorld report.
IDC predicts that Windows-based smart phones will account for 20 percent of the market by 2015, making them second only to Android.