Microsoft is shipping the latest version of its embedded operating system for non-PC devices. The company formally announced the release of Windows Embedded CE 6.0 Release 2 (R2) Wednesday at the Embedded Technology 2007 conference in Yokohama, Japan.

Originally named Windows CE, Microsoft changed the name to the longer moniker when it shipped version 6.0 a year ago. The system is used as the basis for several Microsoft device systems, including Windows Mobile, but development of the core system resides in the Windows Embedded Business, a separate organization, Dan Javnozon, senior product manager with the group, told InternetNews.com.

Microsoft's Windows Embedded Business was formed to provide a platform for devices that are "not computers or phones," Javnozon said. Those include devices such as TV set-top boxes, automated teller machines, medical devices, and gas pumps, as well as automobiles and robot controllers.

And while embedded operating systems may seem arcane, that doesn't mean there is no money to be made in those markets. Quite the contrary.

"With three billion embedded devices forecast to be shipped this year, it's pretty clear that it's a tremendous business opportunity for many [developers] … and it's also a big opportunity for us," Kevin Dallas, general manager of the Windows Embedded Business, said during his keynote address in September at the Embedded Systems Conference East 2007 held in Boston.

Indeed, in the past two years, Microsoft has invested more than $100 million in Windows Embedded product development and associated research and development, Dallas said in a statement this week. "In this year alone, we are increasing that commitment by 33 percent to $75 million, including $5 million in community and academic development," the statement continued. That's not small change.

Release 2 is not out to rock the boat so there are no major changes to the system's kernel. But it is intended to strengthen the OS in a few key areas. For example, R2 adds support for the full Web Services on Devices (WDS) application programming interface (API) that is available on Windows Vista.

That enables scenarios such as digital picture frames on the network. "Vista would say, 'There's a digital picture frame on the network … and, oh, I have a driver for it'," Javnozon said.

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"This is really the first step toward our service-oriented devices vision, and you'll see that this is really going to provide the first step in the foundation for us as we deliver on this vision of service-oriented devices," Dallas said in September.

Additionally, R2 adds support for VoIP video telephony capabilities that will let device-makers add scenarios such as VoIP, video and three-way audio to existing CE 6.0 designs, the company said.

Enhancements to CE 6.0's Internet Explorer implementation are designed to speed rendering of Web pages. A new "pluggable" font engine enables developers to use third-party font engines in their applications. And new auto-detection capabilities aim to enable thin clients to connect to Windows Server 2008.

The benefits for at least one hardware partner – quicker time to market. Chip maker STMicroelectronics plans to ship R2 in its "board support package" for its HDTV set-top box decoder chip. "This will let our customers take R2 and get a product up and running quickly," Mike Hess, market development manager at STMicroelectronics, told InternetNews.com. "That's a huge time to market advantage," he added.