Windows Phone 7 or WinPho7 (sounds like a tech noodle restaurant) launched today. A definite step up from Windows Mobile but still not enough to make people jump from Android or iPhone. Microsoft is definitely looking for the portion of the population that hasn't made the move to a smartphone yet but unfortunately for them, so is Google and Apple.
What gives me pause about this phone is not the interface. I haven't played with one yet but it looks intuitive and has some innovative features. My issue is the hardware which interestingly enough comes from the same manufacturers of Android phones. Samsung, LG, HTC, etc. just don't make amazing phones. They all make good phones but nothing earth shattering which is what it'll take to overtake the likes of Apple. Every Android phone I've held feels cheap, big, clunky, etc. It'll probably be the same with the new WinPho7 models. The bad part is that because the operating systems need to support multiple models, there will be compromises made to the least common denominator. A recipe for making a mediocre product.
Microsoft and Google have more than enough resources to throw at great industrial design. If this is truly a key market for them then they need to develop their own phone. The money is not in software alone. Google gives away the operating system and makes money on app sales and ads. Microsoft will most likely charge a nominal licensing fee for a WinPho7 license. Apple makes nearly 60% in gross margins on the iPhone because of hardware and software. That's about $300+ per iPhone but it's not all about the money - it's about building a phone that will blow away the competition.