Tin-foil hats on! This article, though based on factual information, is 100% pure speculation!
We all know the story. Windows Mobile 7 has been delayed time and again. For the Windows Mobile team, that’s usually par for the course: WinMo releases have typically been few and far apart, and that was OK. But as of late, Microsoft has not only received tough competition, but has been absolutely trounced in the Smartphone market by RIM, Apple, Google and soon a resurgent Palm. Par isn’t going to cut it anymore. To keep up with the big boys, Microsoft is gonna have to step up its game.
Oh sure, they’ve got some interesting things coming down the pipe: My Phone, Skymarket, Zune Mobile; but does anyone really imagine that these services will stop the exodus? Microsoft needs to do something big, and I think (hope?) they’re already on it.

The picture above is from (one of) Microsoft’s Windows 7 site(s). If you take a quick look at the red arrow, you’ll see Windows 7’s beta wallpaper on a Smartphone. What could that mean?
Now, it could be entirely innocent and mundane (it probably is, but where’s the fun in that?). Maybe Microsoft is implying that Windows 7 and Windows Mobile just Work Better Together™.
I happen to think it’s pointing to an as-of-yet unannounced version of Windows 7 – Windows 7 Mobile/Phone/Cute-Marketing-Word-Here.
When I first heard about MinWin, I imagined that Microsoft was pushing to slice and dice Windows into smaller and smaller pieces so it could build a phone-optimized version of their desktop OS, a la Apple and OSX. Then at D6, we got word that Windows 7 would support multi-touch, which, while only moderately useful on laptops (and gimmicky on desktops), makes a ton of sense for a phone. PDC gave us even more info on features that make oh-so-much sense on phones, including Location awareness, a sensor platform (accelerometer and proximity sensors anyone?), and OS-level support for connecting to 3G networks.
Then, just last week, we get this quote from Motorola’s CEO:
“…more of our effort and focus in 2009 is going to Android, but in 2010 when Windows 7 will become available, we will then participate in a more focused way in Windows Mobile 7 in 2010″ – Sanjay Jha, CEO, Motorola
I’m not one for conspiracy theories, but the amount of evidence for this hypothesis is surprising, and Microsoft desperately needs to overhaul Windows Mobile in order to compete against Apple’s iPhone and Palm’s webOS. And they very well could be. Perhaps the WinMo7 delays are Microsoft retooling, shifting from the struggling Windows CE ancestry to the more robust Windows kernel for Windows Mobile 7.
Will Windows 7 be the underpinnings for the next version of Windows Mobile? Even though Windows Mobile 6.5 is being foreseen as the hot topic next week, maybe we’ll still get some sort of answer on Windows Mobile 7.

I kicked yesterday off talking about things which, hypothetically speaking, might be present in Windows 7 Milestone 3 based on what was in Milestone 1. I’m going to dedicate today’s followup serving of yam dip to something much more concrete.
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