This week is Windows Phone 7 week. Microsoft is announcing details of the launch devices and operators, and I shall be watching and reporting with interest on the joint press conference with CEO Steve Ballmer and AT&T’s Ralph de la Vega.

But how significant is this launch? I think it is of considerable significance. Mobile devices are changing the way we do computing. It is not only that more powerful SmartPhones and tablets are encroaching on territory that used to belong to laptop and desktop computers. We are also seeing new business models based on locked-down devices and over-the-air app stores, and new operating systems, or old ones re-purposed. It is a power shift.

Despite its long years of presence in mobile, it feels like a standing start for Microsoft. A recent, and excellent, free day of training on developing for Windows Phone 7 was only one-third full. Verizon will not be offering the phone, and its president Lowell McAdam suggests that the market belongs RIM, Google and Apple, and that Microsoft’s phones are not innovative or leading edge.

I disagree with McAdam’s assessment. Although I’ve not yet had a chance to try a device for myself, what I have seen so far suggests that it is innovative. While the touch UI does borrow ideas with which we have become familiar thanks to iPhone and Android, the dynamically updating tiles and the hub concept both strike me as distinctive. What McAdam really means is that the phone might not succeed in the market, and such views from someone in his position may be self-fulfilling.

The application development platform is distinctive too, being based on .NET, Silverlight and XNA. I have followed Microsoft’s .NET platform since its earliest days – which as it happens were on Windows Mobile, in the form of the Common Executable Format – and Silverlight seems to me the best incarnation yet of the .NET client. It is lightweight; it performs well; it has a powerful layout language that scales nicely, and it has all sorts of multimedia tricks and effects. Visual Studio and the C# language form a familiar and capable set of tools, supplemented by the admittedly challenging Expression Blend for design.

Still, having a decent product is not always enough. Palm’s webOS devices were widely admired on launch, but that was not enough to rescue the company, or to win more than a tiny market share.

Microsoft has resources that Palm lacked, and a reach that extends from cloud to desktop to device. It may be that Windows Phone 7 has better chances. The problem is that the company’s recent history does not demonstrate the success in coming from behind that characterised its earlier days:

• Microsoft came from behind with a GUI operating system, even though Windows was inferior to the Mac’s GUI.
• Microsoft came from behind with Excel versus Lotus 1-2-3.
• Microsoft came from behind in desktop database managers with Access versus dBase.
• Microsoft came from behind in networking and then directory services versus Novell and others.
• Microsoft came from behind with .NET versus Java, which I judge a success even though Java has also prospered.

I am sure there are other examples. Recent efforts though have been less successful. Examples that come to mind include:

• Internet Explorer – still the most popular web browser, but continues to lose market share, even though Microsoft has been working to regain its momentum since the release of IE7 in 2006.
• Zune – now a well-liked portable music player, but never came close to catching Apple’s iPod.
• Silverlight – despite energetic development and strong technology, has done little to disturb the momentum behind Adobe Flash.
• Tablets – Microsoft was an innovator and evangelist for the slate format, but Apple’s iPad is the first device in this category that has caught on.
• Numerous examples from Windows Live versus Google and others.

Now here comes Windows Phone 7, with attention to design and usability that is uncharacteristic of Microsoft other than perhaps in Xbox consoles (red light of death aside). In one sense Microsoft can afford for it to fail; it has strong businesses elsewhere. In another sense, if it cannot establish this new product in such a strategic market, it will confirm its declining influence. The upside for the company is that a success with Windows Phone 7 will do a lot to mend its tarnished image.