The decision allows Microsoft to make a fresh start in the mobile arena, but it also could limit Windows Phone 7's appeal to enterprises, many of whom may be unwilling to scrap existing investments in Windows Mobile to move to the new platform.
And while the enterprise mobile market is largely dominated anyway by RIM, with its corporate-friendly Blackberry devices, Microsoft's move to a brand new mobile environment could lessen its traction with the corporate customers it does have.
Such concerns came to light recently at a roundtable of U.S. Army software developers who, through an internal competition, had been tasked with building mobile apps for use on the battlefield and in other aspects of army life.
One participant, Major Gregory Motes, who is chief of the Army's Information Dissemination Management Division, specifically opted not to have his team develop their apps for the Windows environment because of the backwards compatibility issue.
"The problem we have with Windows Mobile is, right around the time we were starting on this, [Microsoft] announced Windows Phone 7 that would be coming out the holidays of this year," Motes said at the roundtable, according to a transcript of the August event.
"And so as we are going through the process of what we wanted to choose to learn on, you know, choosing to learn on Windows Mobile 6.1 or Windows Mobile 6.5 didn't make much sense to us because 7 was coming out and because it was announced that 7 would not be backwards compatible," said Motes.
Motes, whose team won the competition with a physical fitness app for Army personnel, ultimately decided to develop the app for Apple's iPhone.
While admittedly anecdotal, it's not unlikely that decisions like that taken by Motes and his team are currently playing out in IT shops across corporate America. In Microsoft's favor is the fact that Windows Phone 7 leverages many existing Windows development tools with which developers are already familiar.
But the fact the platform is not backwards compatible with Windows Mobile means Windows Phone 7 will not enjoy the upgrade path advantage that helps Microsoft maintain traction with its Windows PC customers whenever it comes out with a new version of its desktop and server OS.
It may be for the latter reason that Gartner expects Windows Phone 7 to have only minimal impact on the mobile market. Gartner predicts the release of Windows Phone 7 will help bump Microsoft's share of the worldwide market from 4.7% in 2010 to 5.2% in 2011, but says the company's share will ultimately decline to just 3.9% by 2014.
Developers won't have to wait too much longer to decide whether to support Windows Phone 7. Microsoft will formally introduce the platform Monday at a launch event in New York City.