The software giant said it also will make its new enterprise device management software available to all medium-size and large businesses.
Screen shots of some of the new capabilities are shown on a Windows Live blog.
The updated IE Mobile browser will support Adobe Flash and Microsoft's Silverlight so that Windows Mobile users will be able to view multimedia Internet applications in their browsers.
Microsoft had previously announced that it would support Flash and Silverlight in Windows Mobile but had declined to say when the capabilities would become available.
The new IE Mobile will be available to mobile phone makers in the third quarter, with phones using the browser hitting the market by the end of the year, Microsoft said.
The browser update could help Microsoft to compete better with Apple's iPhone, which includes a browser that users have responded to enthusiastically. Owners of phones that support rich browsing, like the iPhone, view more Web pages on phones than those with less capable browsers, according to research done by Julie Ask, an analyst at Jupiter Research.
Microsoft also introduced an updated version of Windows Mobile, version 6.1. The update includes a new zoom capability that lets users view an entire Web page or picture and zoom in up on a portion of a page.
It also features a new Getting Started Center aimed at making it easier to set up e-mail, Bluetooth peripherals and Wi-Fi on the phones. New notifications on the home page of the phone of missed calls, upcoming appointments and new messages will allow users to see such updated information at a glance, Microsoft said.
Phones running Windows Mobile 6.1 could become available to end users as early as the second quarter, Microsoft said.