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Considering in the US we live on a two year upgrade cycle, people who bought phones this year or late last year will be in the market for their next phone after WM7 is out. Whatever happens in-between is sort of irrelevant to them.
We're finally seeing Windows phones in the US that are comparable in form factor and features to iPhones. I think my Imagio has a lot of room for improvement in responsiveness, and it required downloads to reach its full potential as a device with accelerometer and gyro, but people see that 400x800 screen and think it's gorgeous.
Will WM7 be able to establish itself as brand? I think so. Geeks have been anti-Microsoft for 20 years, and it still dominates the PC marketplace. People are comfortable with Windows. It appears that Microsoft gets that a phone is now your entertainment device and computer away from your computer. Two years ago, they still looked at Windows Mobile as primarily an enterprise market, an adjunct to Office software.
So for people coming off contracts in late 2010, there will be WM7 phones, and they'll be competitive. On top of it, Windows is a name that most people are comfortable with (but notice I don't say "that they can trust"). I just hope that Microsoft uses the time to get it closer to "right". And allows you to easily change the friggin' Zune buttons to things you use more often.
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