According to the NY Times, when the Apple iPhone became a hot item, Microsoft executives realized that its software at the time, Windows Mobile, could not compete. In December 2008, a meeting was called by the head of mobile engineering for Windows and the decision was made to toss Windows Mobile and start from the ground up with something new.
In designing a new mobile OS, Microsoft made a decision to balance Apple's highly controlled system and the open source Android system. To eliminate the fragmentation that many have criticized Android for, Microsoft set strict specifications for handset makers who wanted to manufacture Windows Phone models. Early versions of the software had to be revised to get the thumbs up from Microsoft CEO Steve Ballmer.
Microsoft executives knew that entering market late would present special challenges and the hope for the Redmond crew is that with the coming wave of Windows Phone powered Nokia smartphones coming to American soil, things will start to improve for Windows Phone. But even U.S. carriers don't expect a miracle. AT&T executives are still cautious even though the carrier is combining with Nokia and Microsoft on a $100 million ad campaign to push the flagship Nokia Lumia 900, a model that will be displayed at CES this coming week.
source: NYTimes via AppleInsider