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Windows Phone finally jumps into phablet era, but is it too late?

The latest update to Microsoft's mobile operating system isn't massive, but does include a critical change to allow for jumbo phones.

Windows Phone now comes in the supersize variety.

The third update to Windows Phone allows for more columns of tiles. Microsoft

The third and latest update from Microsoft, released Monday, brings a number of incremental upgrades and changes to Windows Phone 8. The most crucial of them is support for a higher-resolution display and larger screen sizes, enabling its partners to finally get into the so-called phablet business.

Phablets, a mashup of a phone and tablet, have quietly become a vital part of any handset manufacturer's product lineup. While they remain a niche business in the US, the oversize phones are proving to be popular in regions such as Asia where, it just so happens, the fledgling operating system is doing pretty well.

"The update will fill the last piece in terms of screen size," said Greg Sullivan, part of Microsoft's Windows Phone team.

It won't be long before we see a Windows Phone phablet hit the scene -- Nokia is widely expected to unveil one at an event in Abu Dhabi, United Arab Emirates, next week.

Microsoft is a little late to the game, following behind a path blazed by Samsung Electronics, which is credited with creating the phablet market with its Galaxy Note franchise. Samsung is already on the third iteration of the Galaxy Note, which has won over critics that once mocked the large display.

That's been normal for Windows Phone, which often falls behind when it comes to specs and support for new technologies because Microsoft must approve their support. The latest update, for instance, finally allows manufacturing partners to incorporate faster quad-core processors into the phones. Bluetooth 4.0, also known as Low Energy, is a standard incorporated by iOS and Android, but isn't yet embraced by Windows Phone.

Sullivan said that Microsoft would prefer to keep a consistent experience on its phones rather than jump at every new feature or technology.

But now there are many options in the market beyond the Galaxy Note 3, including LG's Optimus G Pro or the even bigger Galaxy Mega. HTC is also expected to unveil its own phablet, the One Max, at an event tomorrow. The Galaxy Note phones, however, have really been the only legitimate hit out of the bunch.

So the question is: will anyone even care about a Windows Phone phablet?

But Sullivan argued the update does more than just allow for a larger screen. The changes include the ability to add another column of tiles, allowing users to fit more on their screen.

"It was important not to just make it bigger, but modify it to take advantage of the increased screen real estate," Sullivan said.

The current largest Windows Phone device features a 4.8-inch display. The update will allow for phones with displays that range between 5 inches and 7 inches, Sullivan said.

As the distant third operating system behind Google's Android and Apple's iOS, Microsoft needed to quickly fill all possible product gaps. Windows Phone is pegged to finish the year with 3.9 percent of the global smartphone market this year, with its share increasing to 10.2 percent by 2017, according to IDC.

In comparison, Android will end the year with more than three quarters of the market, with Apple controlling 17 percent.

Thanks to Nokia's deal-making in countries such as China and a wave of colorful and affordable devices, Windows Phones have steadily grown in many international markets, particularly emerging ones where the growth is faster.

Nokia's smartphone team will work to continue that trajectory when Microsoft takes control of that business.

While Microsoft is seeing growth overseas, the US market continues to struggle. Smartphones launched by Nokia and HTC after the launch of Windows Phone 8 last year were crushed by competition from the Galaxy S4 and iPhone 5. HTC in particular took it hard, and hasn't sought to make another Windows Phone after the failure of its Windows Phone 8X and 8S.

The US is proceeding in the right direction, Sullivan said, but noted the lack of progress relative to other markets.

Windows Phone, he said, was making more of an impression with first-time smartphone owners looking to upgrade from a basic phone. He touted the same, consistent experience on a low- and high-end Windows Phone as an advantage over the other platforms.

At least one hurdle is out the way. With BlackBerry throwing in the towel and giving up on the smartphone market, Windows Phone is the No. 3 platform by default. Sullivan said the platform was benefiting from the clarity that comes from two competing upstarts.

Sullivan on BlackBerry: "We're clearly trending in different directions."

Still, Windows Phone has a long way to go before catching up with the likes of iOS and Android. Despite its progress coaxing developer support, Windows Phone remains a low priority relative to the larger platforms, and Microsoft still has to be proactive in getting developers on board.

Sullivan said the platform would have to get past the 10 percent market share mark before app developers come knocking on its door instead.

Microsoft still has a goal to be the No. 1 mobile platform on the market, Sullivan said. As ludicrous as that sounds, he knows shakeups can happen at any time.

"This market can change pretty dramatically," Sullivan said.

Microsoft is desperately hoping things swing in its favor.