The XBox succeeded largely because it was outside the bureaucracy during its formative stages. And since then, absolutely nothing from inside the bureaucracy has integrated well with it.
. Media integration into the 360 was not good.
. Media Center integration wasn't any better.
. 360/Zune integration was never really attempted.
. Live for Windows/XBox Live integration was not good.
. Live Marketplace/Zune Marketplace integration is more awkward than Live/Netflix.
etc.
I'm a Mac / Linux / Android guy. Not a Windows person at all. But I have a Windows media Centre TV and it's awesome.
* I browse upcoming movies on TV by scrolling through a list of movie posters.
* I have Sky pay TV, a DVR, Blu Ray, and Youtube in one interface
* Channels are identified by logos as well as number.
It's a brilliant consumer product. But do you know who sells it in the consumer space?
Nobody.
If you walk into Best Buy or Currys, you'll find boxes from everyone but MS. There's no hardware partners, no Sony no Panasonic no Hitachi WMC boxes. I had to buy a Dell box, a separate remote, and a separate dual tuner. The result is awesome, but there is no part of MS the company that seems to want to stand behind this awesome product.
But Microsoft would have to find a way to sell a box that works with the different types of TV reception - satellite, cable, or freeview in the UK, and that wouldn't be easy. (and it would be just as big of a pain in the US where they would be able to sell the most units), so I can understand why they haven't.
Still, it is strange that nobody else has really tried to sell hardware specific to WMC.
1) iPhone fatigue. I know a number of people who are tired of their iPhones for one reason or another and either have switched (generally to Android) or will be switching when they can. Obviously Android will get a lot of these, but not necessarily all of them.
2) If gaming works well, and there's integration with XBox Live, they could start to pick up gamers. --I doubt anyone really expected Microsoft to be able to rival Nintendo or Sony when the XBox first came out, but it happened.
3) Business users. Granted, many business people love RIM, but if Microsoft is able to provide a fuller experience around business, they'll be able to attract users.
I'm not going to try to predict the success or failure of Windows Phone OS, but I'm certainly not going to write them off before the phones are in the wild.