"When was the last time you saw a Windows Mobile device that couldn't do color? (It's a trick question. The last grayscale device predates the name change to "Windows Mobile.") Subtle differences in screen quality aside, all WM devices have had the same ability to show colors--65536 of them. Modern LCD screens, however, are capable of showing four times that many (262144). So I've been asked, "Why doesn't WM allow OEMs to make use of these better screens?" The short answer is: "We do." The medium answer is: "But don't be so sure you want them to." And the long answer is ... well the rest of this entry."
Many a times we have noticed the manufacturers advertising the LCD on their Smartphones as 256K colors, but Windows Mobile would render only 65K colors. And we have always wondered why doesn't the Smartphone make full use of the LCD's color capability. Mike Calligaro's post on the Windows Mobile Team Blog provides the reasoning in an easy to understand format. :-)