Yes Virginia, Microsoft can succeed in the smartphone business, and it has made a good start. Windows Phone 7 has been more widely praised than any Microsoft product I can remember since Windows 95: even the world's number one Apple fan, Stephen Fry, said he felt joy using one. It doesn't look as though it will ever make a profit, but that's beside the point: Microsoft doesn't need the cash, but it does need the product. Windows Phone 7 is a key element in Microsoft's global strategy of “three screens and a cloud”. As Microsoft's Ashley Highfield told me at the launch: “This is the missing piece of the jigsaw. We are absolutely committed to this market.” Failure is not an option.
The “three screens” are the PC, the TV and the mobile phone, and Microsoft's vision is for all three to work together in an integrated system. This means you should be able to take something you're doing on one screen and seamlessly pick it up on another. If you're playing a game at home on an Xbox 360, for example, you should be able to continue it from your mobile phone on the train to work, then catch up on your PC in the office. Your documents and your music files should be available from all your devices, and so on.
This puts Windows Phone 7 in the front line of Microsoft's strategy, and it shows. The new software brings together Windows Live and Microsoft Exchange email and messaging, Microsoft Office and OneNote with SharePoint Server connections, Xbox Live with your gamertag and avatar, Zune music and video services, and free SkyDrive online storage. There's even a dedicated hardware button to take you to the Bing search engine.
If you hate Microsoft, then you'll really hate Windows Phone 7. However, Microsoft has more than a billion users spread across Windows, Live Hotmail and Messenger, Office, Xbox, Zune (OK, not so many), Bing and its other properties. Windows Phone 7 isn't designed to attract Apple iPhone or RIM BlackBerry users, it's aimed at people who are part of what Microsoft calls the “Windows ecosystem”, and who probably haven't yet bought a smartphone.
The global strategy is visible in the Windows Phone 7 software, which is more innovative than anything else on the market. Instead of the dumb application icons that have been standard on smartphones for a decade, Windows Phone 7 uses live tiles. These provide hubs for different uses, the obvious ones being People, Messaging, Office, Xbox Live, Pictures, and Music & Videos (Zune). This marks a shift from the old app-centric view of the world to a data-centric view that -- subject to implementation -- puts Microsoft ahead of the competition.