Updated October 12, following the official launch: Microsoft Windows Phone 7 handsets in detail

Microsoft will unveil handsets running its new Windows Phone 7 (WP7) operating system for the first time today at an event in New York. Some experts predict this will be a make-or-break product launch.

Analysts say Microsoft's success with WP7 is important to its mobile initiatives, as well as to the overall future prowess of the software giant, which is best known for its desktop operating systems and office productivity software. Analysts regard the WP7 announcement as important to the entire company.

"On a scale of 1 to 10, this announcement is an 11," said Ramon Llamas, an IDC analyst. "This is where the rubber meets the road. It's huge."

Microsoft must prove it has overcome its dismal performance with the current Windows Mobile OS and the failure of a youth-focused Kin phone line that launched in the spring but was killed two months later.

More daunting is how well WP7 can distinguish itself with consumers against Apple's iPhone and an array of Android devices, as well as the persistence of Research in Motion's BlackBerry smartphones with the corporate crowd.

"With WP7, Microsoft is trying to catch up to everyone else in mobile," said Zeus Kerravala, an analyst at Yankee Group. "In many ways, I think they've missed the mobile window, not to play with words. Windows Mobile has left a bad taste in people's mouths and now, trying to get customers to try Microsoft and WP7 again will be difficult, especially with the popularity of Android and Apple."

Microsoft needs to replace those failed products with a "cool and sleek" set of WP7 devices that will "draw people in", Llamas said.

Windows Phone 7 handset line-up

Microsoft is being quiet about the final lineup of devices that will be shown, although a spokeswoman said there will be devices - plural - shown by Microsoft with US carrier AT&T, after a press conference with Microsoft CEO Steve Ballmer and AT&T Mobility President Ralph de la Vega. And Microsoft has not restricted itself to smartphones; some observers expect more news on Microsoft's plans for tablet computers. in the UK, all five major mobile networks - 3, Orange, O2, T-mobile and Vodafone - have announced they will stock handsets running Microsoft Windows Phone 7.

Device makers HTC, LG and Samsung are expected to show off their new products at the launch event. Plenty of YouTube videos have been generated showing the distinctive 'hubs' and 'tiles' motif that will be used to distinguish WP7 from other interfaces. One video shows the incorporation of five popular apps: Netflix, Twitter, Flixster, OpenTable and Travelocity. Another video, that shows HTC's 3D customisation of WP7, has received more than 400,000 hits on YouTube.

Developers, so far, have downloaded more than 300,000 copies of tools to help them build applications. Experts noted that the applications already written for the existing Windows Mobile OS must be heavily rewritten for WP7, and some developers are unhappy about that. While some large third-party development houses, such as Travelocity, will build applications for WP7 phones, it's less clear whether small development shops will be able to handle the development process.

"The jury's out," said Paul Reddick, CEO of Handmark, a mobile application developer who commented this week at CTIA in San Francisco. "Coming out of this economy, developers don't randomly build stuff."

Next page: Apps for Windows Phone 7, and battling Apple and Android >>