With Palm struggling at the sidelines, most observers would probably conclude that the smartphone market will soon be cornered by devices running Micrsoft’s Windows Mobile operating system.

However, recent statistics shows that Apple’s new iPhone has already secured 0.09 percent share of web browsing compared to just 0.06 percent for all Windows CE and Mobile devices combined. Well, the folks over at Redmond are not exactly sitting still either.

Microsoft is aware of the flaws in Windows Mobile and big changes are afoot for Windows Mobile 7.0, according to Ars Technica:

Microsoft plans to completely redo applications such as Internet Explorer, bringing the mobile browser up to par with Apple’s Mobile Safari. The e-mail and SMS applications are also scheduled for complete rewrites. Microsoft plans to make the user interface even more consumer-friendly.

Moving ahead, Microsoft is even hinting at a complete redesign with Windows Mobile 8.0. The redesign could involve having its internals entirely redone to cater to newer, more powerful hardware.

What is your opinion of the Windows Mobile operating system?