Microsoft has informed its hardware and wireless carrier partners that it has delayed the release of Windows Mobile 7, the upcoming major update to its smart phone platform. The delay suggests that warring parties inside of Microsoft continue to disagree about the future of the system: Some believe that the company needs to start over from scratch with a more modern and modular platform, while others think the current platform can be melded to meet the needs of the market.

Whatever happens, this is a tough time to delay a next-generation smart phone platform, a situation that ailing Palm knows all too well. With Blackberry stealing away corporate customers, Apple opening up the consumer smart phone market with its innovative iPhone, and Google entering the market with its first Android phone, Microsoft is in a suddenly tenuous position. The current version of Windows Mobile is generally workmanlike and usable, but it's derided by technology enthusiasts for being staid and uninteresting.

Officially, Windows Mobile 7 has been delayed from the first half of 2009 to the second half 2009, but real world time-to-market is always further lengthened by Microsoft's mobile carrier and hardware partners, who typically add another 6 to 12 months to the schedule. And while the company doesn't plan an interim release of the OS before then, it will ship a new version of its Mobile IE browser that includes the rendering engine from the desktop PC version of IE 6. That browser is expected to make Windows Mobile phones more competitive with the iPhone's Safari browser.

Unofficially, however, the picture is more dramatic. Sources tell me that unnamed high-placed Microsoft engineers have been pushing Microsoft to abandon the current Windows Mobile codebase and replace it with something more elegant. Senior Microsoft executives, including Windows chief Steven Sinofsky, have allegedly rejected that idea.

Regardless of any internal struggles, one might argue that a late 2009 delivery of Windows Mobile to handset makers, and a subsequent first half of 2010 release to end users, puts Windows Mobile 7 firmly on track to ship alongside Windows 7. And there is certainly some symmetry to that.