Microsoft is ready to launch an online application "bazaar" for Windows Mobile-based smartphones in 2009, along with an updated version of Windows Mobile itself, version 6.5. The Wall Street Journal reported Monday that Big Redmond expects the new developments to shore up its gap with Apple's iPhone and Google's Android platform.

Company insiders told The WSJ that Windows Mobile 6.5 will have a "more sophisticated" user interface, and that it will include the ability to wirelessly back up contacts, calendars, photos, and text messages from your Windows Mobile phone to a Web site. Unlike Apple's MobileMe, however, Microsoft's service will not allow wireless syncing between your smart phone and computers.

The name of this service -- and note that this is not a joke -- will be My Phone.

Unlike MobileMe, My Phone will be a free service. MobileMe costs US$99 per year, with that price including a host of other services not related to syncing data. "We think we're providing a true mass-market consumer offering," Todd Brix, senior director of mobile services at Microsoft, told the Journal.

Microsoft's application bazaar will be the first time users will have access to the many applications written for the Windows Mobile platform in one place. Heretofore users have had to track down applications and buy them from retailers and individual developers. Microsoft feels that by offering a bazaar, it will be able to better compete with Apple's App Store, where more than 15,000 apps have been deployed since the iPhone's release and more than 500 million apps have been downloaded.

The company is expected to officially announce these plans on February 16 of this year at a mobile-industry conference in Barcelona, Spain, where Chief Executive Steve Ballmer is to deliver a keynote speech.

On Friday, we reported that Microsoft was continuing to publicly deny that it would release its own branded smart phone. It's possible that Windows Mobile 6.5, My Phone, and the application bazaar were at the root of persistent rumors to the contrary.