Microsoft (Nasdaq: MSFT) hasn't had much luck in mobile phones. Try as it might, the company has never escaped also-ran status on this front. However, based on the early reviews of Windows Phone 7.5 -- formerly known as Mango -- I think that's about to change.

What the critics say
The software is unfinished, but so far, the reviewer response has ranged from cautiously optimistic -- I don't think CNET is capable of joy -- to downright giddy. It seems that Microsoft has set out to delight its customers. The Wall Street Journal described the new operating system as "a mix of elegance and whimsy that's a treat to use." And Gizmodo's reviewer said, "It's almost like the phone is happy to be alive. Which kind of makes you feel happy to use it."

I've only seen pictures and videos, but I understand what the reviewers mean. Applications swing in and out of view as if you're opening and closing doors. Click an email thread, and it pops open. It gives the impression that when you navigate around the device, you're moving through a real space -- like some kind of ever-shifting funhouse.

It looks as if Microsoft has actually crafted an innovative product here. Instead of apps, the Start Screen features an improved version of the live tiles -- customizable boxes that change depending on the app they represent -- that were introduced in WP7. In addition to the obvious tiles -- email, messages, and the like -- you can assign a tile to display the weather or keep you up to date on your friends' Facebook and Twitter activities. You can also pin things such as apps, playlists, and pictures to the home screen for quick access.

Business or pleasure
Taking a cue from the Apple (Nasdaq: AAPL) iEmpire, Microsoft sought ways to integrate the phone into its already successful products.

Last week, Microsoft unveiled Office365 -- a cloud-based version of the company's business and productivity tools. During the presentation, the company made a point of showing off how well WP7.5 works with the service. If you edit a document using the mobile Office suite on your phone, it will automatically sync the changes to your computer. You can also collaborate on a document in real time from your phone. If it works as promised, services like this will only put a further dent in Research In Motion's (Nasdaq: RIMM) business-user stronghold.

Microsoft has also included a few features to connect Mango to the Xbox 360. It extended the popular Xbox Live service to the phone. You can send messages to your gamer friends, edit your profile, and keep track of your gamer score. You can also buy music and video from the Zune Marketplace and play it on your phone, computer, or console, making it easier to get your Doctor Who fix.

Is it enough?
The smartphone market will only get more competitive between now and Mango's release this fall. Apple and Google (Nasdaq: GOOG) are both expected to release updates around the same time. Hewlett-Packard (NYSE: HPQ) also plans to release the Pre 3 this summer.

Mango should get some attention once Nokia (NYSE: NOK) releases its first Windows Phone, but Microsoft will need to invest in marketing the platform to consumers if it hopes to gain any kind of footing. If it can show people how it has made using a smartphone sublime, then I think the phone will turn out to be a win for the company.

If you want to keep an eye on Microsoft and Mango's developments, add it to your watchlist.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.