I've heard WP7 has no compatibility whatsoever (so it's unable to run even WM5/6 apps)? If that's true — am I understanding properly that MS is introducing almost completely empty platform, which requires software to be written yet? I don't know whenever they will succeed or not, but it seems to be a hard task to enter the market when all rivals already have quite strong positions (including lots of software).
See for example: OS9 vs. OSX
The problem with MS, constantly, is that they have prioritized backwards compatibility over just about everything else - often usability, stability, and functionality. This has kept their platforms technologically backwards and their usability an infamous joke.
It's about time that MS started fresh with a modern, relevant platform. I just hope they can do something similar with desktop Windows.