We are just a days away from the opening of the Mobile World Congress (MWC) in Barcelona. In the mobile world, MWC is the key mobile conference of the year – bigger than CTIA and CES.

There has not been a lot of news leading up to the show, but one item has caught my attention. Rumor has it that Microsoft will announce Windows Mobile 7. What will be a major announcement from the biggest OS maker in the world is barely moving the needle in the press leading to MWC. How is it that Microsoft has completely lost mindshare in the mobile world?

Coming from such a dominant position on the desktop, Microsoft should be the dominant OS on mobile handsets, but it has ceded this position to its rivals through an oppressive licensing structure, lack of focus, and lengthy delays in release upgrades. Nokia, Reaseach-in-Motion, and Apple are all ahead of Microsoft, and Google’s Android is rapidly closing the gap in mobile OS marketshare.

With its anticipated announcement, Microsoft is down to its final stand. Microsoft needs to take a page from Motorola’s playbook, who was basically left for dead last year in the handset market prior to the Droid release, and make some major strategic moves to have any chance in the mobile OS market. If I was running Microsoft’s mobile strategy, here are four things I would do.

1. Copy Apple’s iPhone strategy. When Apple introduced the iPhone, it was tied into its existing ecosystem. For example, iPhone users did not have to learn new behaviors for buying products, they used the iTunes store they were already familiar with. I would leverage Microsoft’s existing infrastructure and platforms with their mobile strategy, not force users to learn new behaviors.

2. Integrate with the xBox platform. The biggest product success Microsoft has had in the last 5 years is its xBox franchise. The xBox franchise has a rabid and loyal fanbase. With gaming becoming an increasingly popular segment in mobile, I would create a tight integration between the mobile OS and the xBox platform, giving its loyal gamers an easy way to move back and forth from the console and mobile environment.

3. Give the OS away. The ability for Microsoft to command a license fee for its mobile OS has passed. Handset manufactuers can use Android or LiMo (Linux Mobile) for free. I would provide WinMo 7 for free or start manufacturing my own handsets.

4. Leverage the Zune HD interface. I’ve been using a Zune HD for the past 6 months, and the interface is amazing. It is the best touchscreen interface I’ve used to date – much better than the iPhone and Nexus One. It is fast, responsive, accurate and intuitive. I would build a mobile OS to leverage that interface, not introduce yet another one to the market.

The latest rumors have Microsoft trending these directions, but not in a strong enough way. Microsoft is taking too cautious an approach to modifying its mobile strategy when it should be taking bold, go-for-the gold approaches. Microsoft cannot afford to be a niche player in mobile, there is too much at stake. Unless Microsoft is willing to venture outside its comfort zone and take some risk, Microsoft will quickly become an non-factor in this important market.

Microsoft’s upcoming announcement will be a turning point in its mobile future, for better or worse. While it hasn’t been getting much attention, this is one person who is anxious to see what they have up their sleeve, if anything.